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Bob Mason

Economic Calendar:

Wednesday, 13th May

Eurozone Industrial Production (MoM) (Mar)

Thursday, 14th May

German CPI (MoM) (Apr) Final

Spanish CPI (YoY) (Apr) Final

Spanish HICP (YoY) (Apr) Final

Friday, 15th May

German GDP (QoQ) (Q1) 1st Estimate

German GDP (YoY) (Q1) 1st Estimate

French CPI (MoM) (Apr) Final

French HICP (MoM) (Apr) Final

Italian CPI (MoM) (Apr) Final

Eurozone GDP (QoQ) (Q1) 2nd Estimate

Eurozone GDP (YoY) (Q1) 2nd Estimate

Eurozone Trade Balance (Mar)


The Majors

It was a mixed day for the European majors on Tuesday, with the EuroStoxx600 rising by 0.26% to lead the way. The CAC40 and DAX40 struggled, however, with losses of 0.39% and 0.05% respectively.

There were no stats from the Eurozone to provide direction, leaving the majors in the hands of market sentiment towards COVID-19.

Concerns over a 2nd wave of the pandemic delivered a 2nd consecutive day in the red for the CAC40 and DAX30.

Reports of a rise in new cases from China, South Korea, and Germany spooked the markets. The upward trend in new COVID-19 cases was as a result of an easing in lockdown measures.

The Stats

It was another quiet day on the Eurozone economic calendar on Tuesday. There were no material stats from the Eurozone to provide the majors with direction on the day.

From the U.S, April inflation figures added to the negative sentiment later in the day. The markets had anticipated softer inflation and they got it.

The annual core rate of inflation eased from 2.10% to 1.60%. Economists had forecast an annual core rate of inflation of 1.70%. Fears over deflation added to the market angst on Tuesday.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. BMW, Continental, and Daimler slid by 2.82%, by 2.87%, and by 2.81% respectively to lead the way down. Volkswagen wasn’t far behind, with a 2.23% loss on the day.

It was a mixed day for the banks. Deutsche Bank fell by 0.64%, while Commerzbank rose by 0.34%.

Deutsche Lufthansa declined by 1.26% to reverse a 0.62% gain from Monday.

From the CAC, the banking sector struggled on Tuesday. BNP Paribas fell by 1.00%, with Credit Agricole and Soc Gen seeing losses of 0.83% and 1.67% respectively.

It was also a bearish day for the auto sector. Peugeot and Renault slid by 2.47% and by 2.88% respectively.

Air France-KLM slipped by 0.54%, partially reversing a 2.83% gain from Monday, while Airbus SE slid by 6.02%.

On the VIX Index

A run of 3 consecutive days came to an abrupt end for the VIX, which surged by 19.84% on Tuesday. Reversing a 1.47% decline from Monday, the VIX ended the day at 33.0.

The VIX had been on the way to a 4th consecutive day in the red before an afternoon surge from sub-27 levels.

Dovish chatter from FOMC members coupled with a warning from infectious disease official Anthony Fauci delivered the pickup in fear.

Anthony Fauci warned of the possible repercussions of reopening the economy too quickly, while central bankers talked of massive bankruptcies as a result of the lockdown.

The combination of the two, together with the dire inflation figures left the U.S major indexes in the red.

On Tuesday, the S&P500 slid by 2.05%, with the Dow and NASDAQ declining by 1.89% and by 2.06% respectively.

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. March industrial production figures for the Eurozone are due out later today.

Following some particular dire production figures from member states last week and the April PMI numbers, however, there should be little reaction to today’s figures.

From the U.S, April’s wholesale inflation figures should also have a muted impact later in the day.

The lack of influence from the data will leave the majors in the hands of geopolitics and COVID-19 updates.

We would expect concerns over the rise in the new of new coronavirus cases in South Korea and China to continue to test market resilience.

A similar trend could transpire across the EU and the U.S, as lockdown measures ease. Such an outcome would be catastrophic…

The Latest Coronavirus Figures

On Tuesday, the number of new coronavirus cases rose by 71,802 to 4,328,342. On Monday, the number of new cases had risen by 76,701. The daily increase was lower than Monday’s rise and lower than an 81,537 increase on the previous Tuesday.

France, Germany, Italy, and Spain reported 4,176 new cases on Tuesday, which was down from 5.374 new cases on Monday. On the previous Tuesday, 4,993 new cases had been reported.

From the U.S, the total number of cases rose by 21,450 to 1,407,284 on Tuesday. On Monday, the total number of cases had risen by 18.196. On Tuesday, 5th May, the total new number of cases had risen by 25,189.

In the futures markets, at the time of writing, the DAX was down by 238.5 points, with the Dow down by 82 points.

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