European Equities: Futures Point to a Mixed Start with no Stats to Influence

The Majors

It was a particularly bullish end to the week for the European majors on Friday, with the CAC40 rallying by 3.71% to lead the way.

The DAX30 and EuroStoxx600 weren’t far behind, with gains of 3.36% and 2.48% respectively.

After a minor blip on Thursday, appetite for riskier assets surged at the end of the week. A combination of better than expected economic data from the U.S and fiscal and monetary policy support delivered the upside.

On Thursday, the ECB expanded the duration and size of its emergency bond-buying program. This had followed on from Germany’s COVID-19 Stimulus package from Wednesday.

At the end of the week, there was also a report of the U.S government planning to deliver additional stimulus in the coming weeks.

The Stats

It was a quiet day on the Eurozone economic calendar on Friday. German factory order figures for April were in focus but had little influence on the majors.

Following the German coalition government’s stimulus package announcement on Wednesday, April stats were of even less interest.

Factory orders tumbled by a whopping 25.8% in April, following a 15% slide in March. This was the largest decline since records began back in January 1991.

According to Destatis,

• Domestic orders decreased by 22.3%, with foreign orders down by 28.1%.
• New orders from the euro area went down by 30.6%, and by 26.7% from other countries.
• Manufacturers of intermediate goods saw new orders decline by 22.7%, while manufacturers of capital goods saw a slide of 30.06%.
• Consumer goods manufacturers recorded a more modest 11.4% fall in new orders.
• Year-on-year, factory orders were down by 36.6%.

From the U.S

Following Thursday’s disappointing weekly jobless claims figures, it was a different story on Friday.

Nonfarm payrolls unexpectedly jumped by 2.509m, with the unemployment rate falling from 14.7% to 13.3% in May.

Economists were way off on their forecasts, with nonfarm payrolls forecasted to slide by 8m and the unemployment rate to jump to 19.7%.

While a 13.3% unemployment rate is still dire, the recovery from April and the expectation of more support boosted demand for riskier assets. The hopes are of a speedier economic recovery than had been anticipated.

The Market Movers

For the DAX: It was a particularly bullish day for the auto sector on Friday. Continental and Daimler rallied by 6.06% and 5.97% to lead the way. BMW and Volkswagen saw more modest gains of 2.83% and by 4.70% respectively.

It was another bullish day for the banks. While Deutsche Bank rose by 2.81%, Commerzbank surged by 11.43% on the day.

Deutsche Lufthansa saw a 3^rd consecutive day in the green, with a 5.50% rally coming off the back of a 1.94% gain on Thursday.

From the CAC, it was also a bullish day for the banks. BNP Paribas and Soc Gen rallied by 8.59% and by 10.36% respectively, while Credit Agricole saw a more modest 6.34% gain.

The auto sector also saw the upside continue. Peugeot and Renault rallied by 8.66% and by 9.83% respectively.

Air France-KLM and Airbus SE led the way, however, with gains of 12.48% and 12.50% respectively.

On the VIX Index

It was back into the red for the VIX on Friday, which fell by 5.00%. Reversing a 0.58% gain from Thursday, the VIX ended the day at 24.52.

Better than forecasted economic data from the U.S and fiscal and monetary policy fuelled demand for riskier assets on Friday.

There was very little fear in the markets at the end of the week, with geopolitical risk also taking a backseat.

The S&P500 rose by 2.62%, with the Dow and the NASDAQ ending the day with gains of 3.15% and 2.06% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Germany’s industrial production figures for April are due out in the early part of the day.

April stats will continue to have a muted impact on the majors, however, which will leave the majors in the hands of news wires.

There are no stats from the U.S to influence later in the day.

From the weekend, May trade data from China provided the markets with food for thought ahead of the open.

The trade data out of China provided little comfort. While exports fell by 3.3% versus a forecasted slide of 7%, imports tumbled by 16.7%. Economists had forecast a 9.7% decline.

As a result of the slump in imports, China’s USD trade surplus widened from $45.33bn to 62.93bn in May.

Following the quiet of last week, any chatter from Beijing and Washington will influence… Tensions do linger.

The Latest Coronavirus Figures

On Sunday, the number of new coronavirus cases rose by 123,802 to 7,085,740. On Saturday, the number of new cases had risen by 138,258. The daily increase was lower than Saturday’s rise, while higher than 112,909 new cases from the previous Sunday.

Germany, Italy, and Spain reported 610 new cases on Sunday, which was down from 884 new cases on Saturday. On the previous Sunday, 734 new cases had been reported.

From the U.S, the total number of cases rose by 20,274 to 2,007,449 on Sunday. On Saturday, the total number of cases had risen by 34,499. On Sunday 31^st May, a total of 20,569 new cases had been reported.

In the futures markets, at the time of writing, the DAX was down by 41 points, while the Dow was up by 41 points.

For a look at all of today’s economic events, check out our economic calendar.