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European Equities: Corporate Earnings, Brussels, and Monetary Policy in Focus

By:
Bob Mason
Published: Apr 29, 2020, 01:32 UTC

A lack of stats will leave the majors in the hands of COVID-19 updates, corporate earnings, and chatter from the U.S ahead of the FED decision.

European Equities: Corporate Earnings, Brussels, and Monetary Policy in Focus

Economic Calendar:

Wednesday, 29th April

German CPI (MoM) (Apr) Prelim

Thursday, 30th April

French GDP (QoQ) (Q1) 1st Estimate

German Retail Sales (MoM) (Mar)

French Consumer Spending (MoM) (Mar)

French CPI m/m (Apr) Prelim

French HICP m/m (Apr) Prelim

Spanish GDP (QoQ) (Q1) 1st Estimate

Spanish HICP (YoY) (Apr) Prelim

German Unemployment Change (Apr)

German Unemployment Rate (Apr)

Italian CPI (MoM) (Apr) Prelim

Eurozone CPI (YoY) (Apr) Prelim

Eurozone Unemployment Rate (Mar)

Eurozone GDP (Q1) 1st Estimate

ECB Interest Rate Decision (Apr)

The Majors

It was a 2nd consecutive day in the green for the European majors on Tuesday.

The EuroStoxx600 rose by 1.68% to lead the way, with the CAC40 and DAX30 rising by 1.43% and by 1.27% respectively.

There were no material stats from the Eurozone to influence, leaving the majors in the hands of the news wires.

From the EU and the U.S, the number of new coronavirus cases continued the downward trend, supporting government steps to ease lockdown measures.

Governments were also busy layout out their plans to begin reopening, which was key to the gains early in the week.

The Stats

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

From the U.S, April consumer confidence figures and March trade data also had a muted impact in spite of another set of dire numbers.

In April, the CB Consumer Confidence Index slumped from 118.8 to 86.9. Also negative was a widening in the goods trade deficit from $59.89bn to $64.22bn.

The Market Movers

For the DAX: It was a mixed day for the auto sector. Continental slid by 2.17% to buck the trend on the day. Daimler rose by 2.96% to lead the way, however, with BMW and Volkswagen seeing gains of 2.23% and 2.68% respectively.

It was another bullish day for the banks, however. Deutsche Bank rose by 3.59%, with Commerzbank rallying by 4.39% on the day.

Deutsche Lufthansa eked out a 0.35% gain following Monday’s 11.83% breakout.

From the CAC, the banking sector also found strong support on Tuesday. BNP Paribas rallied by 5.72%, with Credit Agricole and Soc Gen rising by 5.50% and 2.28% respectively.

The auto sector also saw further gains, with Peugeot and Renault rising by 2.66% and by 0.74% respectively.

Air France-KLM bucked the trend on the day, with a 2.89% loss, while Airbus SE rose by 3.49%.

On the VIX Index

A run of 4 consecutive days in the red came to an end on Tuesday, with the VIX rising by 0.84%. Partially reversing a 7.35% fall from Monday, the VIX ended the day at 33.6.

The upside on the day came as the U.S majors saw red for the 1st time in 5-days, with tech stocks weighing on the day.

Earnings results and the lack of any forward guidance overshadowed plans to ease lockdown measures in the U.S.

The S&P500 fell by 0.52%, with the Dow and NASDAQ seeing losses of 0.13% and by 1.40% respectively.

VIX 29/04/20 Daily Chart

The Day Ahead

It’s another quiet day ahead on the Eurozone economic calendar. Economic data is limited to prelim April inflation figures out of Germany.

Expect the numbers to have a muted impact on the majors, however, with the FED in action later today and the ECB in action tomorrow.

From the U.S, 1st estimate U.S GDP numbers will be in focus later today. The markets will get a sense of how badly the economy was affected ahead of the widespread lockdown and whether current fiscal and monetary policy support is actually enough…

While there will be plenty of speculation on what’s next from the FED’s perspective and the ECB for that matter, the markets are expecting miracles as lockdown measures ease.

This does leave the majors exposed to another sell-off should economic activity not see a marked pickup in response.

Outside of the numbers, more details on government plans to ease lockdown measures and corporate earnings will also be of influence.

The Latest Coronavirus Figures

On Tuesday, the number of new coronavirus cases rose by 75,118 to 3,134,199. On Monday, the number of new cases had risen by 66,953. While up from Monday, this was down marginally from a 75,450 increase on the previous Tuesday.

France, Germany, Italy, and Spain reported 6,020 new cases on Tuesday, which was down from 9,262 new cases on Monday. France reported just 69 new cases, with Spain seeing a marginal decline from Monday.

From the U.S, the total number of cases rose by 25,258 to 1,035,765 on Tuesday. On Monday, the total number of cases had risen by 23,699. On Tuesday, 21st April, the total new number of cases had risen by 25,985.

In the futures markets, at the time of writing, the DAX was down by 15.5 points, while the Dow was up by 73 points.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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