European Equities: Futures Point Northwards with COVID-19, Brexit, and Capitol Hill in FocusIt’s a quiet day on the economic calendar, leaving Brexit, COVID-19, and U.S politics in focus once more.
Thursday, 22nd October
GfK German Consumer Climate (Nov)
Eurozone Consumer Confidence Flash
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Friday, 23rd October
French Manufacturing PMI (Oct) Prelim
French Services PMI (Oct) Prelim
German Manufacturing PMI (Oct) Prelim
German Services PMI (Oct) Prelim
Eurozone Manufacturing PMI (Oct) Prelim
Eurozone Markit Composite PMI (Oct) Prelim
Eurozone Services PMI (Oct) Prelim
It was a mixed day for the European majors on Tuesday. The DAX30 and EuroStoxx600 fell by 0.92% and by 0.35% respectively, while the CAC40 ended the day flat.
Following a bearish start to the week and a lack of material stats for the markets to consider, Brexit, COVID-19, and U.S politics remained the key drivers.
New COVID-19 cases in Europe reportedly hit fresh record highs at the start of the week. The upward trend in new cases would likely lead to more stringent containment measures that could ultimately derail the economic recovery.
From Capitol Hill, progress had been made on the day but not enough to agree on a stimulus bill ahead of Pelosi’s deadline.
On the Brexit front, the deadlock continued, with little progress reportedly made by negotiators on Tuesday.
It was a quiet day on the Eurozone economic calendar. Key stats included German wholesale inflation figures.
In September, the Producer Price Index increased by 0.4%, after having stalled in August. Economists had forecast a 0.1% decline.
According to Destatis,
- The index of producer prices for industrial products decreased by 1.0% compared with the corresponding month in the preceding year.
- Energy prices as a whole decreased by 3.3%. On an annual basis, prices of petroleum products were down 17.9, with prices of natural gas down by 8.2%.
- Prices of intermediate goods declined by 1.3%, with prices of non-durable consumer goods falling by 0.1%.
- There were increases in the prices of capital goods (+0.9%) and durable consumer goods (+1.4%).
From the U.S
It was a relatively quiet day on the economic calendar. Housing sector data included housing starts and building permits for September. The stats had a muted impact on the European majors, however, with the market focus on Capitol Hill.
The Market Movers
For the DAX: It was a bullish day for the auto sector on Tuesday. BMW and Daimler rose by 1.37% and by 1.11% respectively. Continental and Volkswagen saw more modest gains of 0.89% and 0.57% respectively.
It was also a bullish day for the banks. Deutsche Bank rose by 1.11%, with Commerzbank rallying by 3.16%
From the CAC, it was another bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.72% and by 0.68% respectively. Soc Gen led the way yet again, however, with a 2.54% gain.
It was a relatively bullish day for the French auto sector. Peugeot and Renault ended the day with gains of 0.06% and 1.89% respectively.
Air France-KLM followed Monday’s 7.36% rally with a 1.55% gain, with Airbus SE rising by 1.13%.
On the VIX Index
It was a 7th consecutive day in the green for the VIX. Following a 6.46% gain on Monday, the VIX rose by 0.58% on Tuesday to end the day at 29.35.
Fresh optimism over the chances of a stimulus deal provided support to the U.S equity markets. Updates from Nancy Pelosi ahead of the 48-hour deadline propped up the markets on the day.
For the VIX, the upside came in spite of gains across the U.S majors. COVID-19 and U.S politics limited gains on the day following Monday’s slide.
The Dow and S&P500 rose by 0.40% and by 0.47% respectively, with the NASDAQ ending the day up by 0.33%.
The Day Ahead
It’s a particularly quiet day on the Eurozone economic calendar. There are no material stats due out of the Eurozone or the U.S to provide the majors with direction.
The lack of stats will continue to leave Brexit, COVID-19, and U.S politics in focus.
With Brexit negotiators failing to make progress and new COVID-19 cases continuing to rise, a U.S Stimulus Bill would be needed to shift sentiment.
In the futures markets, at the time of writing, the Dow was up by 92 points, with the DAX up by 17 points.
For a look at all of today’s economic events, check out our economic calendar.