European Equities: COVID-19 Updates and U.S Jobless Claims to Test Optimism…Germany joins the 10 U.S states and Beijing in a spike in new COVID-19 cases, Expect COVID-19 chatter, and U.S jobless claims to drive the majors.
Thursday, 18th June
ECB Economic Bulletin
Friday, 19th June
German PPI (MoM) (May)
It was another bullish day for the European major on Wednesday, with the CAC40 rising by 0.88% to lead the way. The DAX30 and EuroStoxx600 weren’t far behind, with gains of 0.54% and 0.74% respectively.
The FED’s purchase of corporate bonds and hopes of yet more stimulus from the U.S government supported the majors.
It wasn’t the biggest set of gains, however, as concerns over a 2nd wave COVID-19 pandemic lingered.
It was a relatively quiet day on the Eurozone economic calendar on Wednesday. Key stats included May’s finalized inflation figures for the Eurozone, which had a muted impact on the majors.
The annual core rate of inflation stood at 0.9% in May, which was in line with prelims, while softer than 1.0% in April. Month-on-month, consumer price fell by 0.1%, following a 0.3% rise in April.
The Eurozone’s annual rate of inflation softened from 0.3% to 0.1% in May. This was in line with prelim figures.
According to Eurostat,
- Estonia (-1.8%), Luxembourg (-1.6%), Cyprus and Slovenia (both -1.4%) had the lowest annual rates.
- The highest contribution to the annual euro area inflation rate came from:
- Food, alcohol & tobacco (+0.64 percentage points).
- Services (+0.59 percentage points).
- Non-energy industrial goods (+0.06 percentage points).
- Energy (-1.20 percentage points).
From the U.S
Economic data included May building permits and housing starts that had a muted impact on the European majors.
FED Chair Powell’s 2nd day of testimony to lawmakers came after the European close.
The Market Movers
For the DAX: It was another mixed day for the auto sector on Wednesday. Continental and Volkswagen fell by 1.45% and by 1.62% respectively. BMW and Daimler found support, however, rising by 0.69% and by 0.18% respectively.
It was a bearish day for the banks. Deutsche Bank and Commerzbank saw losses of 1.36% and 1.21% respectively.
Deutsche Lufthansa returned to the red, falling by 2.58% to reverse a 2.0% gain on Tuesday.
From the CAC, it was back into the red for the banks. Soc Gen fell by 1.29% to lead the way down. BNP Paribas and Credit Agricole saw relatively modest losses of 0.15% and 0.48% respectively.
The French auto sector also struggled, following Tuesday’s gains. Peugeot and Renault ended the day with losses of 0.51% and 3.71% respectively.
Air France-KLM slid by 3.89%, with Airbus SE falling by 0.11%.
On the VIX Index
It was a 4th consecutive day in the red for the VIX on Wednesday, which fell by 0.59%. Following on from a 2.12% decline from Tuesday, the VIX ended the day at 33.47.
A choppy session saw the S&P500 give up gains late in the day as the markets struggled over fears of a 2nd wave pandemic.
News from China of fresh lockdown measures in Beijing was coupled with news of record spikes across six U.S states. This was later followed up with news of 10 states seeing their highest 7-day average of new cases since the start of the pandemic.
Another lockdown across U.S states would be a catastrophe, not just for the U.S economy, but for Trump and the chances of a 2nd term. Just weeks ago, the U.S president had announced that the U.S must reopen at the cost of more lives…
On the day, the Dow and S&P500 fell by 0.65% and by 0.36% respectively, while the NASDAQ eked out a 0.15% gain.
The Day Ahead
It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide the majors with direction.
A lack of stats will leave the majors in the hands of the ECB Economic Bulletin and signals from Asia and the U.S.
We will expect the 2nd day of limited economic indicators to also give COVID-19 greater influence ahead of the U.S session.
From the U.S, we expect both the weekly jobless claims and June’s Philly FED Manufacturing Index to garner plenty of interest.
An unexpectedly large jump in jobless claims and expect risk aversion to hit the markets…
The Latest Coronavirus Figures
On Wednesday, the number of new coronavirus cases rose by 125,202 to 8,381,861. On Tuesday, the number of new cases had risen by 156,317. The daily increase was lower than Tuesday’s rise and 128,469 new cases from the previous Wednesday.
Germany, Italy, and Spain reported 2,480 new cases on Wednesday, which was up from 767 new cases on Tuesday. On the previous Wednesday, just 510 new cases had been reported. Notably, Germany reported 1,797 new cases on Wednesday. This was the first time Germany has reported more than 1,000 cases since 8th May…
From the U.S, the total number of cases rose by 23,628 to 2,232,028 on Wednesday. On Tuesday, the total number of cases had risen by 26,844. On Wednesday, 10th June, a total of 20,674 new cases had been reported.
In the futures markets, at the time of writing, the DAX was down by 109.5 points, with the Dow down by 206 points.
For a look at all of today’s economic events, check out our economic calendar.