European Equities: Private Sector PMIs to Hit the Majors as Risk Aversion sinks the FuturesThe European majors are set to open in the red ahead of prelim February private sector PMI numbers that aren’t likely to support…
Friday, 21st February
French Manufacturing PMI (Feb) Prelim
French Services PMI (Feb) Prelim
German Manufacturing PMI (Feb) Prelim
German Services PMI (Feb) Prelim
Eurozone Manufacturing PMI (Feb Prelim)
Eurozone Markit Composite PMI (Feb) Prelim
Eurozone Services PMI (Feb) Prelim
Italian CPI (MoM) (Jan) Final
Eurozone Core CPI (YoY) (Jan) Final
Eurozone CPI (MoM) (Jan) Final
Eurozone CPI (YoY) (Jan) Final
It was a bearish day for the European majors on Thursday, with the DAX30 sliding by 0.91% to lead the way down. The CAC40 and EuroStoxx600 weren’t far behind, with losses of 0.80% and 0.86% respectively.
A slowdown in the spread of the coronavirus, according to Wednesday numbers, failed to provide support on the day.
On the day, earnings weighed on the European majors, with a number of marquee listed companies announcing disappointing results.
It was a relatively busy day on the Eurozone economic calendar on Thursday. Economic data included March consumer confidence figures out of Germany.
Finalized January inflation figures out of France and January wholesale inflation figures out of Germany had a muted impact on the day.
According to the GfK, the Consumer Climate Index fell from 9.9 to 9.8 in March. Economists had forecast a fall to 9.6.
- While sentiment towards economic expectations improved, income expectations and propensity to buy declined.
- It was the 2nd month in a row that economic expectations saw improvement, with the uptick coming in spite of the coronavirus spread.
From the U.S a surge in manufacturing sector activity in Philly failed to reverse the effects of weak corporate earnings. The Philly FED Manufacturing Index rose from 17.0 to 36.7. Economists had forecast a fall to 12.0.
The Market Movers
For the DAX: it was a bullish day for the auto sector on Thursday. Daimler led the way rallying by 2.97%, with Continental rising by 1.42%. BMW and Volkswagen saw more modest gains of 0.43% and 0.01% respectively.
It was also a bullish day for the banks. Commerzbank rose by 1.05%, with Deutsche Bank gaining 0.04%.
Deutsche Lufthansa hit reverse, however, sliding by 2.40%, with Air France-KLM earnings results hitting the sector.
From the CAC, it was a bearish day for the banks. BNP Paribas fell by 0.91%, while Credit Agricole and Soc Gen tumbled by 1.35% and by 1.81% respectively.
It was a mixed day for the autos, however. Renault found more support, rallying by 2.98%, while Peugeot fell by 0.33%.
Air France-KLM took a hit on Thursday, sliding by 3.49% off the back of its latest earnings results and negative outlook. While profits fell, it was the warning that operating profit could fall by as much as €200m between February and March that did the damage.
On the VIX Index
The VIX rose by 8.21% on Thursday. Reversing a 3.03% decline from Wednesday, the VIX ended the day at 15.6.
Risk aversion through the European and U.S sessions provided the upside on the day as the markets responded to news of a rise in coronavirus cases in Beijing.
The S&P500 fell by 0.38% on the day to pull the index into the red for the current week.
Even positive economic data out of the U.S was unable to reverse the losses on the day.
The Day Ahead
It’s a busy day ahead on the Eurozone economic calendar. Economic data includes prelim February private sector PMIs out of France, Germany and the Eurozone.
Finalized inflation figures for January are also due out of Italy and the Eurozone but will likely have a muted impact on the majors.
Earnings disappointed on Thursday, with companies delivering more warnings over the impact of the coronavirus.
Today’s PMIs will give the markets an indication of what impact the spread of the virus will likely have on the Eurozone economy.
In the futures markets, at the time of writing, the DAX was down by 64 points, with the Dow down by 119 points.