European Equities: Crude Oil and COVID-19 to Drive the Majors

The Majors

It was a bearish day for the European majors on Tuesday, with the DAX30 sliding by 3.99% to lead the way down. The CAC40 and EuroStoxx600 weren’t far behind, with losses of 3.77% and 3.39% respectively.

The European majors played catch-up on Tuesday. The unprecedented slide in WTI prices into negative territory sent the majors into the deep red.

Tuesday’s reversal ended a run of 3 consecutive days in the green, with current crude oil price levels bad news for inflation and the global economy.

It wasn’t all doom and gloom, however, with Germany having reopened smaller shops, though Germany appears to be in no hurry to remove containment measures altogether…

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Tuesday.

German and Eurozone ZEW Economic Sentiment figures for April were in focus in the early part of the session.

An unexpected jump in economic sentiment amongst analysts failed to deliver support, however.

Germany’s ZEW Economic Sentiment Index rose from -49.5 to 28.2, with the Eurozone’s rising from -49.5 to 25.2. Economists had forecast Germany’s Sentiment Index to rise to -42.3.

The numbers suggested that analysts expect a V-shaped economic recovery, which was contrary to the IMF’s outlook.

Analysts were aligned when considering current conditions, however. The Current Conditions Index slumped from -43.1 to -91.5. Economists had forecast a fall to -77.5.

From the U.S, housing sector numbers were of little comfort, with existing home sales sliding by 8.5% in March. The worst is yet to come, however, with the U.S lockdown measures in April likely to weigh heavily on the sector.

The Market Movers

For the DAX: It was another bearish day for the auto sector on Tuesday. BMW and Volkswagen tumbled by 4.86% and by 4.88% respectively to lead the way down. Continental and Daimler saw more modest losses of 3.40% and 1.14% respectively.

It was also a bearish day for the banks, with Commerzbank and Deutsche Bank sliding by 5.25% and by 3.78% respectively.

Deutsche Lufthansa joined the rest of the pack in the red, with a 3.59% loss on the day.

From the CAC, the banking sector hit reverse on Tuesday. BNP Paribas and Credit Agricole both slid by 3.99%, with Soc Gen tumbling by 5.60%.

The auto sector had another mixed day, however. Peugeot bucked the trend with a 0.26% gain, while Renault fell by 2.07%.

Air France-KLM and Airbus SE slid by 4.93% and 6.58% respectively.

On the VIX Index

The VIX saw only its 2^nd consecutive day in the green on Tuesday. Following on from a 14.89% jump on Monday, the VIX rose by 3.60% on Tuesday to end the day at 45.4.

Crude oil prices were the key driver on the day, with WTI’s slide into negative territory overshadowing COVID-19 numbers.

The S&P500 slid by 3.07%, with the Dow and NASDAQ falling by 2.67% and 3.48% respectively.

Housing sector numbers from the U.S were of little help and will likely deliver more doom and gloom in the coming months.

The Day Ahead

It’s another relatively quiet day ahead on the Eurozone economic calendar. April’s flash consumer confidence numbers for the Eurozone are due out late in the session.

We will expect the majors to brush aside the figures, however, with consumer confidence likely to be hit hard by the EU wide lockdown.

From the U.S, there are no major stats to consider on the day, leaving updates on COVID-19 and crude oil prices in focus.

On Tuesday, the number of new coronavirus cases rose by 75,450 to 2,556,476. This was up marginally from a 73,685 increase on Monday. France, Germany, Italy, and Spain reported 10,752 new cases, which was up from 7,604 new cases on Monday. While up from Monday, the figures were well below levels seen in the previous week.

From the U.S, the total number of cases rose by 25,985 to 818,744. On Monday, the total number of cases had risen by 28,494.

In the futures markets, at the time of writing, the DAX was up by 41.5 points, with the Dow up by 32 points.