European Equities: Consumer Confidence Figures Could Limit any Upside Later Today

The Majors

It was a bullish day for the European majors on Wednesday, with the CAC40 rising by 0.90% to lead the way. The DAX30 and EuroStoxx600 weren’t far behind, with gains of 0.79% and 0.83% respectively.

A softer EUR and updates from China on the spread of COVID-19 provided support.

According to COVID-19 numbers as at Tuesday night, there were a total of 74,185 cases, with 2004 deaths. The pace of new infections continued to ease, which was considered positive.

Ultimately, however, the expectation of continued fiscal and monetary policy support to prop up the Chinese economy drove the majors on the day.

The Stats

It was a quiet day on the Eurozone economic calendar on Wednesday, with no material stats out of the Eurozone to provide direction.

From the U.S, stats were limited to housing sector data and wholesale inflation figures for January, which had a muted impact ahead of the FOMC meeting minutes which were released after the European close.

The Market Movers

For the DAX: it was a mixed day for the auto sector on Wednesday. Continental led the way rising by 0.65%, with Volkswagen and Daimler seeing more modest gains of 0.15% and 0.18% respectively. BMW bucked the trend on the day, falling by 0.43%.

It was a bearish day for the banks, however. Commerzbank fell by 0.62%, with Deutsche Bank falling by 0.65%.

Deutsche Lufthansa found strong support, rising by 1.02%.

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen rose by 0.15% and by 0.05% respectively, while Credit Agricole fell by 0.11%.

Autos found much-needed support, with even Renault avoiding another day in the deep red. Peugeot rose by 0.83%, while Renault rallied by 2.49%.

Air France-KLM saw red, however, falling by 0.82% on the day.

On the VIX Index

The VIX fell back into the red on Wednesday, with a 3.03% decline. Partially reversing an 8.41% rise from Tuesday, the VIX ended the day at 14.4.

Risk appetite returned on Wednesday, with the U.S majors making solid gains in spite of Apple’s earnings warning on Monday.

Tech stocks led the way, suggesting that the markets see any slowdown in the Chinese economy as a short-term blip.

From the FED, the FOMC meeting minutes suggested that rates would likely remain unchanged near-term, as trade uncertainties diminish. While the FED noted that global growth was beginning to stabilize, uncertainties remained.

There were references to the coronavirus but were not alarmist enough to spook the markets on the day.

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Economic data includes German and Eurozone consumer confidence numbers for March and February.

Wholesale inflation figures out of Germany and finalized January inflation figures out of France will likely have a muted impact on the majors.

Later in the day, Philly FED Manufacturing PMI numbers from the U.S will also provide direction.

On the monetary policy front, we can expect the majors to respond to the overnight FOMC meeting minutes and the ECB monetary policy meeting minutes due out later today.

Ahead of the European session, the PBoC is expected to cut Loan Prime Rates to bolster support. Any hold and expect the majors to come under pressure at the open.

In the futures markets, at the time of writing, the DAX was up by 35.5 points, with the Dow up by 71 points.