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European Equities: Futures Point to a Slide at the Open, with No Stats to Distract

Futures are pointing to a fall at the open for the DAX. A lack of stats will leave COVID-19 updates and chatter from governments in focus.
Bob Mason
EU flags waving over blue sky. Brussels, Belgium

Economic Calendar:

Thursday, 2nd April

Spanish Unemployment Change

Friday, 3rd April

Spanish Services PMI (Mar)

Italian Services PMI (Mar)

French Services PMI (Mar) Final

German Services PMI (Mar) Final

Eurozone Markit Composite PMI (Mar) Final

Eurozone Services PMI (Mar) Final

Eurozone Retail Sales (MoM) (Feb)

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The Majors

It was back in the red for the European majors on Wednesday, with the CAC40 falling by 4.30% to lead the way down. The DAX30 and EuroStoxx600 weren’t far behind, with losses of 3.94% and 2.90% respectively.

Market reaction to some quite dire coronavirus forecasts for the U.S led the majors into the red. Forecasts of between 100,000 to 240,000 deaths, even with social distancing spooked the markets

Trump added to the negative sentiment by warning the markets of a very painful 2-weeks ahead in the battle against COVID-19.

Economic data on the day was an afterthought, with investors showing little interest in jumping into riskier assets. The pullback came following the European majors having had their worst quarter since 2002…

The Stats

It was another busy day on the Eurozone economic calendar on Wednesday. Key stats included March Manufacturing PMI numbers for Spain and Italy. Finalized PMIs for France, Germany and the Eurozone also garnered some interest.

Spain’s Manufacturing PMI fell from 50.4 to 45.7, with output and new orders seeing the largest fall since mid-2012. Average lead times hit a record high, with purchasing and jobs both cut in the wake of a slide in confidence.

Italy’s Manufacturing PMI slid from 48.7 to 40.3 in March, which was the lowest level since April 2009. Operating conditions deteriorated at the sharpest pace for nearly 11-years, with output contracting at the most marked rate on record. Job shedding was the quickest since August 2012, with new export orders sliding at the fastest pace since March 2009.

For the finalized PMIs, France’s manufacturing PMI was revised upwards from 42.9 to 43.2, while Germany’s PMI was revised down from 45.7 to 45.4.

The Eurozone’s Manufacturing PMI was revised down from 44.8 to 44.5. In February, the Manufacturing PMI had stood at 49.2.

  • The Eurozone’s manufacturing PMI contracted for a 14th consecutive month and fell to a 92-month low in March.
  • Output, new orders and purchasing all fell sharply, with jobs cut markedly and supply-side constraints intensifying at a record pace.
  • At the country level, Italy ranked last with a 131-month low 40.3. The Netherlands stood at the top of the table, with a 2-month low 50.5.

German retail sales for February had a muted impact in spite of a 1.2% rise in sales in February. March and, April figures are likely to paint a very different picture as a result of the coronavirus. The same was the case for unemployment numbers for the Eurozone, where the unemployment rate fell from 7.4% to 7.3%.

From the U.S

From the U.S, the ISM Manufacturing PMI slipped from 50.1 to 49.1, which was far better than a forecasted 45.0. The figures had a muted impact, however, with the continued lockdown having a greater impact on the all-important services sector.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Wednesday. Continental, Daimler, and Volkswagen tumbled by 7.86%, 6.80%, and 6.66% respectively to lead the way down. BMW saw a more modest 4.91% loss on the day.

It was also a bearish day for the banks, with Commerzbank and Deutsche Bank sliding by 6.30% and by 5.54% respectively.

Deutsche Lufthansa slid by 6.62% off the back of a 1.97% loss on Tuesday.

From the CAC, it was yet another bearish day for the banks. Soc Gen tumbled by 9.53%, with BNP Paribas and Credit Agricole sliding by 5.96% and by 5.17% respectively.

The auto sector reversed Tuesday’s gains, with Peugeot and Renault ending the day down by 6.49% and 7.88% respectively.

Air France-KLM joined its peers in the red with a 5.85% slide. Airbus SE saw another heavy loss on Wednesday, tumbling by 12.03%.

On the VIX Index

The VIX saw its 1st day in the green for the current week, rising by 6.57% on Wednesday. Reversing a 6.20% fall from Tuesday, the VIX ended the day at 57.1.

The U.S equity markets saw red for a 2nd consecutive day, as the markets responded to some quite dire coronavirus forecasts.

On the day, the S&P500 slid by 4.41%, with the Dow and NASDAQ ending the day with losses of 4.44% and 4.41% respectively.

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. Key stats are limited to Spanish unemployment change figures that are unlikely to have an influence on the majors.

The lack of stats will leave the majors in the hands of the coronavirus news updates and the U.S weekly jobless claims figures.

Outside of the numbers, any fiscal policy moves by member states would also need consideration.

Negative sentiment towards the impact of the coronavirus weighed on the futures markets, however, as the number of cases continued to surge.

At the time of writing, the total number of coronavirus cases across France, Germany, Italy, and Spain rose by 24,011 to 349,662. In the U.S, the total number of cases jumped from 187,347 to 214,482. That took the total number of cases globally to 934,464.

In the futures markets, at the time of writing, the DAX was down by 79.5 points, while the Dow was up by 198 points.

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