European Equities: Covid-19 News Updates and ECB President Lagarde In FocusThe European majors are set for another fall at the open as risk aversion sweeps the Asian markets. Coronavirus news updates overnight were not market-friendly.
Wednesday, 26th February
France Jobseekers Total
Thursday, 27th February
Spanish HICP (YoY) (Feb) Prelim
Spanish HICP (YoY) (Feb) Prelim
Eurozone Consumer Confidence (Feb) Final
Friday, 28th February
French Consumer Spending (MoM) (Jan)
French GDP (QoQ) (Q4) 2nd Estimate
German Unemployment Change (Feb)
German Unemployment Rate (Feb)
Italian CPI (MoM) (Feb) Prelim
German CPI (MoM) (Feb) Prelim
It was another bearish day for the European majors on Tuesday, with market fear over the spread of the coronavirus doing the damage once more.
The CAC40 led the way, falling by 1.94%, with the DAX30 and EuroStoxx600 ending the day down by 1.88% and by 1.76% respectively.
Economic data continued to play second fiddle on the day as news of a further spread of the coronavirus raised the prospects of a global pandemic.
It was a relatively quiet day on the Eurozone economic calendar on Tuesday. Economic data included 2nd estimate GDP numbers for the 4th quarter out of Germany.
According to Destatis,
- The German economy stalled in the 4th quarter, which was in line with 1st estimate numbers.
Compared with the previous quarter,
- The growth of domestic final consumption expenditure slowed markedly.
- Household final consumption expenditure stagnated in the 4th
- General government final consumption expenditure rose by just 0.3%.
- It was a mixed bag for fixed capital formation.
- While gross fixed capital formation in construction increased by 0.6%, capital formation in machinery and equipment slid by 2%. Capital formation in other fixed assets was up by 1.1%.
- Trade weighed on the economy in the 4th quarter, with exports down 0.2%, while imports of goods and services rose by 1.3%. It was the exports of goods, which fell by 0.4% that offset a rise in the exports of services (+0.4%).
Year-on-year, the economy grew by 0.3%, which was also in line with 1st estimates.
From the U.S, consumer confidence didn’t help, with the CB Consumer Confidence Index rising from 130.4 to 130.7. Economists had forecast an increase to 132.4.
The Market Movers
For the DAX: it was a bearish day for the auto sector on Tuesday. Continental led the way tumbling by 4.32%, with Volkswagen down by 2.25%. BMW and Daimler saw more modest losses of 1.44% and 1.42% respectively.
It was also a bearish day for the banks. Commerzbank slid by 5.84%, with Deutsche Bank down by 3.12%.
Deutsche Lufthansa also saw more red, sliding by 3.79% off the back of Monday’s 7.80% tumble.
From the CAC, it was a particularly bearish day for the banks. BNP Paribas slid by 4.88%, with Credit Agricole and Soc Gen falling by 3.62% and by 3.64% respectively.
The auto sector also continued to struggle. Renault fell by 2.87, with Peugeot ending the day down by 0.67%.
Air France-KLM fell by 3.28% following on from an 8.78% slide from Monday.
On the VIX Index
The VIX rose by 11.27% on Tuesday to market a 4th consecutive day in the green. Following on from a 46.55% surge on Monday, the VIX ended the day at 27.9.
A particularly bearish day drove the VIX to 30.0 levels for the first time since December 2018.
Market reaction to the continued spread of the coronavirus weighed heavily on the global equity markets, with the S&P500 sliding by 3.03%.
The Day Ahead
It’s another relatively quiet day ahead on the Eurozone economic calendar on Wednesday. Economic data includes jobseeker totals from France.
Barring particularly dire numbers, the majors are unlikely to respond to the numbers later this morning.
With stats from the U.S limited to new home sales figures, market sentiment towards the global economic outlook will likely limit any upside on the day.
On the monetary policy front, ECB President Lagarde is scheduled to speak later in the day. Any monetary policy talk will influence, with the ECB likely to have material concerns over the spread of the coronavirus. The real question is what the ECB has to offer in terms of support. Certain members of the ECB will likely be reluctant to favor any further easing…
In the futures markets, at the time of writing, the DAX was down by 150.5 points, while the Dow was up by 57 points.