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European Equities: Coronavirus Updates and Government Chatter in Focus

Riskier assets came under pressure going into the European open. A sharp increase in new COVID-19 cases and more stringent containment measures weigh.
Bob Mason
Global financial markets

Economic Calendar:

Monday, 30th March

Spanish HICP (YoY) (Mar) Prelim

Spanish CPI (YoY) (Mar) Prelim

German CPI (MoM) (Mar) Prelim

Tuesday, 31st March

French Consumer Spending (MoM) (Feb)

German Unemployment Change (Mar)

German Unemployment Rate (Mar)

Spanish GDP (QoQ) (Q4)

Italian CPI (MoM) (Mar) Prelim

Eurozone Core CPI (YoY) (Mar) Prelim

Eurozone CPI (MoM) Prelim

Eurozone CPI (YoY) (Mar) Prelim

Wednesday, 1st April

German Retail Sales (MoM) (Feb)

Spanish Manufacturing PMI (Mar)

Italian Manufacturing PMI (Mar)

French Manufacturing PMI (Mar) Final

German Manufacturing PMI (Mar) Final

Eurozone Manufacturing PMI (Mar) Final

Eurozone Unemployment Rate (Feb) Final

Thursday, 2nd April

Spanish Unemployment Change

Friday, 3rd April

Spanish Services PMI (Mar)

Italian Services PMI (Mar)

French Services PMI (Mar) Final

German Services PMI (Mar) Final

Eurozone Markit Composite PMI (Mar) Final

Eurozone Services PMI (Mar) Final

Eurozone Retail Sales (MoM) (Feb)

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The Majors

It was a bearish end to a bullish week for the European majors on Friday, with the CAC40 sliding by 4.23% to lead the way down. Things were not much better for the DAX30 and EuroStoxx600, which fell by 3.68% and by 3.26% respectively.

There were no stats out of the Eurozone at the end of the week to distract the markets, leaving news updates on the coronavirus to provide direction.

In the U.S, the total number of coronavirus cases surged to exceed those in China at the end of the week. The jump on new cases came in spite of the U.S government enforcing containment measures to limit the spread of the virus.

Things were not much better in the EU, with Spain and Italy seeing cases continuing to rise, contributing to the total number of cases across the EU trebling in the week.

While Italy and Spain saw the largest number of cases, France and Germany weren’t far behind, pointing to a continued economic standstill going into the 2nd quarter.

Some profit-taking going into the weekend was to be expected, particularly when there is the risk of a marked spike in new cases before the market open on Monday.

The Stats

It was a quiet day on the Eurozone economic calendar on Friday. There were no material stats to provide the majors with direction on the day.

From the U.S, economic data largely took a back seat, with the markets showing little interest in February numbers. Finalized consumer sentiment figures for March were revised downwards, however, painting a bleaker consumer spending outlook.

The Market Movers

For the DAX: It was a bearish day for the auto sector. Volkswagen and Daimler tumbled by 8.29% and 7.99% respectively to lead the way. BMW and Continental saw more modest losses of 5.30% and 6.69% respectively.

It was also a bearish day for the banks, with Commerzbank and Deutsche Bank sliding by 5.91% and 7.89% respectively.

Deutsche Lufthansa joined the rest of the pack in the deep red, with a 6.97% loss.

From the CAC, it was a bearish day for the banks. BNP Paribas and Credit Agricole fell by 3.57% and 6.04% respectively, while Soc Gen slid by 8.03%.

It was not much better for the auto sector. Peugeot fell by 4.17%, with Renault sliding by 7.45%.

Air France-KLM fell back into the red with a 6.15% slide. Airbus SE also struggled, following the 20.46% surge on Thursday, falling by 5.7%.

On the VIX Index

The VIX was back on the rise on Friday, gaining 7.44%. Reversing a 4.61% fall from Thursday, the VIX ended the day at 65.5.

Economic data took a back seat on the day, with the U.S equity markets hitting reverse going into the weekend.

It may have been the best week for the U.S majors since 2009, but it was a bearish end as investors locked in profits.

A continued spread of the coronavirus across the U.S weighed on the day, as the U.S overtook China with the largest number of reported cases.

The upside came in spite of the $2tn Stimulus Bill, with the latest coronavirus numbers suggesting that the economic fallout could be more severe than initially thought.

On the day, the S&P500 fell by 3.37%, with the Dow and NASDAQ sliding by 4.06% and by 3.79% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Prelim March inflation figures are due out of Spain and Germany. Following the ECB Economic Bulletin, released last week, the markets are prepped for softer inflationary pressures.

The numbers are therefore likely to take a backseat as the majors respond to the updated coronavirus figures from the weekend.

There was certainly nothing positive to support a continuation of last week’s rebound.

From the U.S, there are no major stats to influence later in the session, though expect any chatter from the Oval Office would need monitoring.

U.S President Trump is looking to get the economy churning once more. Much will depend, however, on which states are able to return to work. The last thing that the U.S economy needs is a full-blown lockdown.

In the futures markets, at the time of writing, the DAX down up by 80.5 points, with the Dow down by 212

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