European Equities: COVID-19, the ECB, and Economic Data in Focus
Thursday, 29th October
German Unemployment Change (Oct)
German Unemployment Rate (Oct)
Spanish CPI (YoY) Prelim
Spanish HICP (YoY) (Oct) Prelim
Deposit Facility Rate (Oct)
ECB Monetary Policy Decision / Statement / Press Conference
German CPI (MoM) (Oct) Prelim
Friday, 30th October
French GDP (QoQ) (Q3) 1st Estimate
German GDP (Q3) 1st Estimate
German Retail Sales (MoM) (Sep)
French Consumer Spending (MoM) (Sep)
French CPI / HICP (Oct) Prelim
Italian CPI (MoM) Prelim
Spanish GDP (QoQ) (Q3) 1st Estimate
Italian CPI (MoM) (Oct) Prelim
Eurozone Inflation / GDP / Unemployment Rate
It was a 3rd consecutive day in the red for the European majors on Wednesday. The DAX30 tumbled by 4.17%, with the CAC40 and the EuroStoxx600 sliding by 3.37% and by 2.95% respectively.
Market concern over the surge in new COVID-19 cases and measures to contain the virus continued to weigh.
Hopes of a v-shaped economic recovery have diminished, with the 4th quarter likely to be materially impacted by the virus.
News of lockdown measures across key economies of the Eurozone has raised the prospects of another economic meltdown.
France and Germany both announced new lockdown measures in a bid to contain the virus.
Adding to the market angst that pulled the European majors down to levels last seen in late May was a lack of progress towards a stimulus package in the U.S.
It was a quiet day on the Eurozone economic calendar. There were no material stats from the Eurozone to distract the markets from the 2nd wave of the COVID-19 pandemic.
From the U.S
It was a quieter day on the economic calendar. Key stats included September trade data and retail inventories.
The stats had a muted impact on the majors, however, with the U.S equity markets following the European majors into the red.
The Market Movers
For the DAX: It was yet another particularly bearish day for the auto sector on Wednesday. BMW slumped by 5.35% to lead the way down, with Daimler sliding by 4.96%. Continental and Volkswagen weren’t far behind, with losses of 4.37% and 4.55% respectively.
It was a mixed day for the banks. Deutsche Bank eked out a 0.24% gain, while Commerzbank slid by 3.56%
From the CAC, it was another particularly bearish day for the banks. BNP Paribas slid by 5.18%, with Credit Agricole and Soc Gen ending the day down by 4.36% and by 4.71% respectively.
It was also another bearish day for the French auto sector. Peugeot fell by 4.54%, with Renault tumbling by 7.96%.
Air France-KLM slid by 5.75%, with Airbus SE ending the day with a 3.48% loss.
On the VIX Index
It was a 3rd consecutive day in the green for the VIX on Wednesday. Following on from a 2.74% gain on Tuesday, the VIX surged by 20.78% to end the day at 40.28.
The upward trend through the 1st half of the week took the VIX to 40 levels for the 1st time since June.
COVID-19 and the reintroduction of lockdown measures in Europe, together with rising cases in the U.S drove the VIX northwards.
On Wednesday, the Dow and S&P500 slid by 3.43% and 3.53% respectively, with the NASDAQ seeing a loss of 3.73%.
The Day Ahead
It’s a busier day on the Eurozone economic calendar. Key stats include German unemployment figures for October and prelim October inflation figures from Spain and Germany.
On the monetary policy front, the ECB will also be in action. The latest lockdown measures will likely to deliver a dovish tone, while the ECB is expected to stand pat on policy.
From the U.S, 3rd quarter GDP figures and the weekly jobless claims figures will also be in focus on the day.
While the stats will influence, the latest lockdown measures will likely mute the impact of any positive numbers, however.
Key drivers on the day will continue to be Brexit, COVID-19, and U.S politics. The U.S Presidential Election is less than a week away.
In the futures markets, at the time of writing, the Dow was up by 129 points.
For a look at all of today’s economic events, check out our economic calendar.