European Equities: COVID-19, U.S Stats, and the EU Summit and Brexit in FocusThe futures point to a bearish start, with concerns over COVID-19, Brexit, and a failure by Congress to deliver stimulus weighing…
Thursday, 15th October
French CPI (MoM) (Sep) Final
French HICP (MoM) (Sep) Final
ECB President Lagarde Speaks
Friday, 16th October
Italian CPI (MoM) (Sep) Final
Eurozone Inflation (Sep) Final
Eurozone Trade Balance (Aug)
It was a mixed day for the European majors on Wednesday. The DAX30 eked out a 0.07% gain, while the CAC40 and EuroStoxx600 fell by 0.12% and 0.09% respectively.
Following negative news on COVID-19 vaccine and treatment trials earlier in the week, the market attention returned to the COVID-19 numbers.
A continued rise in new COVID-19 cases across Europe weighed on market risk sentiment on the day. A lack of progress towards an effective vaccine leaves the markets to consider the possibility of another global lockdown.
News of a reintroduction of containment measures across EU member states weighed on the majors midweek.
On the economic data front, industrial production figures for the Eurozone failed to provide support early in the session.
From the U.S, fading hopes of a COVID-19 stimulus bill before the New Year also tested risk sentiment on the day.
It was a relatively quiet day on the Eurozone economic calendar. Key stats included industrial production figures for the Eurozone and finalized inflation figures from Spain.
In August, industrial production increased by 0.7%, coming up short of a forecasted 0.8% rise. In July, production had surged by 5.0%.
According to Eurostat,
- Compared with July 2020, production of durable consumer goods rose by 6.8%, intermediate goods by 3.1%, and energy by 2.3%.
- The production of both capital goods and non-durable consumer goods fell by 1.6%, however.
- Member states with the highest increases in industrial production included Portugal (+10.0%) and Italy (+7.7%).
- By contrast, Ireland (-13.4%), Estonia (-2.1%), and Luxembourg (-1.2%) registered the largest decreases in production.
- Compared with August 2019, industrial production declined by 7.2%. Only Portugal and Ireland registered increases in production. Both saw production rise by 2.1%.
- Luxembourg (-15.8%), Germany (-11.2%), and France (-7.3%) reported the largest falls in production.
Inflation figures from Spain were in line with prelim figures, with deflationary pressures persisting in September.
From the U.S
September wholesale inflation figures had a muted impact on the majors. The producer price index rose by 0.4% in September, following a 0.3% increase in August. Economists had forecast a 0.2% rise. The core producer price index also increased by 0.4%, following a 0.4% increase in August. Economists had forecast a 0.2% rise.
The Market Movers
For the DAX: It was a mixed day for the auto sector on Wednesday. Continental and Volkswagen rose by 0.84% and by 0.42% respectively, while BMW and Daimler fell by 0.69% and by 1.54% respectively.
It was also a mixed day for the banks. Deutsche Bank fell by 0.52%, while Commerzbank gained 0.09%
From the CAC, it was a relatively bullish day for the banks. BNP Paribas rose by 1.17%, with Credit Agricole and Soc Gen seeing gains of 0.97% and 0.92% respectively.
It was a bullish day for the French auto sector, however. Peugeot rose by 1.30%, with Renault rallying by 3.46%.
Air France-KLM found much-needed support, rising by 0.94%, while Airbus SE slid by 2.40%.
On the VIX Index
It was a 3rd consecutive day in the green for the VIX. Following a 3.99% gain on Tuesday, the VIX rose by 1.27% to end the day at 26.40.
A lack of progress towards a coronavirus stimulus bill weighed on market risk sentiment on Wednesday. With new COVID-19 cases spiking and a lack of progress towards a vaccine, the focus was on government aid.
U.S Treasury Secretary Mnuchin spoke on Wednesday, stating that the chances of a deal before the election would be slim.
On the earnings front, Goldman Sachs and Bank of American delivered solid results, while Wells Fargo disappointed.
The Dow and S&P500 fell by 0.58% and by 0.66% respectively, with the NASDAQ ending the day down by 0.80%.
The Day Ahead
It’s a relatively quiet day on the Eurozone economic calendar. Economic data includes finalized September inflation figures from France. Barring any material downward revision, however, the stats should have a muted impact on the majors.
From the U.S, it’s a busier day ahead on the economic calendar. Key stats include Philly and New York State manufacturing PMI numbers and the weekly jobless claims figures.
Other stats due out include import and export price figures that will likely have a muted impact on the majors.
On the monetary policy front, ECB President Lagarde is scheduled to speak late in the European session. Expect any chatter on monetary policy or the economic outlook to also influence.
Away from the economic calendar, U.S politics, the EU Summit and Brexit, and COVID-19 news will also influence.
On the Brexit front, failure for both sides to find common ground today could lead to a no-deal Brexit at the end of the year.
Ahead of the European open, inflation figures out of China, reaction to U.S corporate earnings from Wednesday, and the lack of progress on Capitol Hill will influence.
In the futures markets, at the time of writing, the Dow was down by 21 points, with the DAX down by 61 points.
For a look at all of today’s economic events, check out our economic calendar.