With the EU in lockdown mode, another rally would defy logic. The ECB's Economic Bulletin and U.S employment figures could bring the majors back to earth...
It was a second consecutive day in the green for the European majors, with the CAC40 rallying by 4.47% to lead the way. The EuroStoxx600 and DAX30 saw more modest gains of 3.09% and 1.79% respectively.
Wednesday delivered yet another choppy session, with the majors seeing red before finding late support.
The upside came in spite of the continued spread of the coronavirus and the ever-increasing number of countries going into full lockdown.
Hopes of a smooth passing of the U.S Stimulus Bill provided support, following news that the U.S administration had struck a deal.
It was a quieter day on the Eurozone economic calendar on Wednesday. German IFO index numbers for March were in focus along with French jobseeker numbers.
In March, Germany’s IFO Business Climate Index tumbled from 96.0 to 86.1. Economists had forecast fall to 87.7.
According to the IFO’s March report,
February durable goods orders had a muted impact, with the spread of the coronavirus and both fiscal and monetary policy support coming a month later…
For the DAX: It was a mixed day for the auto sector. Daimler rallied by 3.51%, off the back of Tuesday’s 23.82% surge, to lead the way. BMW and Volkswagen also found further support, rising by 2.88% and 2.25% respectively. Continental bucked the trend on the day, falling by 0.06%.
It was another bullish day for the banks, however, with Commerzbank and Deutsche Bank rising by 5.43% and by 3.22% respectively.
Deutsche Lufthansa fell by 1.48% on the day, partially reversing an 11.44% rally from Tuesday.
From the CAC, it was also a bullish day for the banks. Soc Gen led the way once more with an 11.44% gain, with BNP Paribas and Credit Agricole rising by 5.47% and 7.99% respectively.
The auto sector also found further support, with Peugeot and Renault rising by 2.76% and 1.91% respectively.
Air France-KLM rose by 4.29%, with the upside coming in spite of air travel coming to a standstill for an unknown period of time. Airbus SE made an even stronger gain of 7.2% on the day…
The VIX rose by 3.7% on Wednesday to see green for a 2nd consecutive day. Following a 0.13% gain on Tuesday, the VIX ended the day at 64.0.
Once more we saw the VIX make gains alongside the U.S equity markets, suggesting that some may not be fully convinced in the movements.
When considering the continued spread of the coronavirus and lockdown across the globe it isn’t wholly surprising.
On the day, the S&P500 rose by 1.15%, with the gains coming in spite of the Stimulus Bill yet to have been voted through.
It’s a relatively busy day ahead on the Eurozone economic calendar. Germany’s April GfK Consumer Climate figures are due out along with the ECB’s Economic Bulletin.
The markets are not expecting anything positive from the consumer climate figures, leaving the majors in the hands of the ECB Economic Bulletin.
It will be the first real economic assessment since the ECB’s rollout of the PEPP. Following the March prelim private sector PMIs, the Bulletin will certainly garner more attention than usual.
From the U.S, expect the weekly jobless claims figures to send shockwaves through the global financial markets… There is also the Stimulus Bill to consider. At the time of writing, the Bill had yet to be passed through…
In relation to the coronavirus, the markets will need to see further evidence that the spread is slowing in Italy and Germany, in particular…
In the futures markets, at the time of writing, the DAX was up by 24.5 points, with the Dow up by 265 points.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.