European Equities: Futures Point to a Positive Open with Coronavirus News Providing Support

The Majors

It was a bearish end to the week, with the European majors seeing an end to 2 consecutive days in the green.

The DAX30 fell by 1.69% to lead the way down, with the CAC30 and EuroStoxx600 falling by 1.30% and by 1.10% respectively.

Friday’s sell-off came off the back of EU minister failing to deliver a long-term aid package to EU member states impacted by COVID-19.

Economic data failed to provide support on the day, with Germany’s IFO Business Climate figures for April adding to the doom and gloom.

While Germany eased lockdown measures and Italy and France announced plans to ease, it was negative news on the treatment front. News of COVID-19 treatment drug Remdesivir failing to in clinical trials also weighed on the European majors.

The Stats

It was a relatively busy day on the Eurozone economic calendar on Friday. Key stats Germany’s IFO Business Climate Index figures for April.

According to the April IFO Report,

• The Business Climate Index tumbled from 85.9 to a record low 74.3 in April, with the current situation sub-index weighing.
• While the Expectations Index slid from 79.5 to 69.4, the Current Assessment sub-index slumped from 92.9 to 79.5.
• In manufacturing, the Business Climate Index fell to its lowest level since March 2009, with the expectations sub-index falling to a record low.
• In the services sector, the Business Climate Index fell to a record low. Both the expectations and sentiment sub-indexes also saw record lows.
• Things were no better for trade, which saw the Business Climate Index continue to slide. Assessments of the current situation and expectations both fell to record lows.

From the U.S

The markets were somewhat desensitized following Thursday’s stats. While finalized consumer sentiment and expectations indexes saw an upward revision, durable goods orders slumped by 14.4% in March.

The only positive was a 0.2% decline in core durable goods, which fell far less than a forecasted 5.8% slide…

The Market Movers

For the DAX: It was a mixed end to the week for the auto sector. Continental rose by 1.58% on Friday to buck the trend. BMW, Daimler, and Volkswagen fell by 0.66%, by 1.10%, and by 0.23% respectively.

It was a bearish day for the banks, however, with Commerzbank and Deutsche Bank sliding by 4.05% and by 4.36% respectively.

Deutsche Lufthansa continued its descent, sliding by 6.78% over liquidity concerns.

From the CAC, the banking sector struggled at the end of the week. BNP Paribas fell by 3.06%, with Credit Agricole and Soc Gen sliding by 3.2% and 4.88% respectively.

The auto sector also saw red, with Peugeot and Renault declining by 0.12% and by 2.95% respectively.

Air France-KLM and Airbus SE joined the pack in the red, with losses of 2.04% and 3.52% respectively.

On the VIX Index

It was 3^rd consecutive day in the red for the VIX on Friday. Following on from a 1.43% decline on Thursday, the VIX slid by 13.17% to end the day at 35.9.

The downside came on the day as the U.S equity markets continued to claw their way back from the Tuesday slide.

A pickup in crude oil prices in the 2^nd half of the week that continued on Friday provided support at the end of the week.

News of the Senate passing through another economic aid package to support businesses was also equity market positive on the day.

The S&P500 and NASDAQ rose by 1.39% and by 1.65%, with the Dow seeing a 1.11% gain on the day.

The Day Ahead

It’s a quiet start to the week on the Eurozone economic calendar. Jobseeker figures out of France are in focus later this morning. We don’t expect the numbers to have a material impact on the majors, however.

COVID-19 news updates and industrial profit numbers out of China will likely provide direction.

There are also no material stats due out of the U.S to provide direction late in the session.

Following Friday’s pullback, some positive chatter from Brussels and a downward trend in COVID-19 numbers were positives ahead of the European open.

On Sunday, the number of new coronavirus cases rose by 71,251 to 2,992,128. A downward trend was seen through the weekend, following Friday’s 112,961 spike.

France, Germany, Italy, and Spain reported 7,063 new cases on Sunday, which was down from 9,526 new cases on Sunday. France reported just 612 new cases on Sunday, with Germany seeing the number of new cases fall for 3 consecutive days.

From the U.S, the total number of cases rose by 26,157 to 960,651 on Sunday. On Saturday, the total number of cases had risen by 35,655, which was down from a 45,566 spike on Friday.

In the futures markets, at the time of writing, the DAX was up by 99.5 points, while the Dow was down by 47 points.