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European Equities: Will U.S Jobless Claims Figures Deliver a 4th Consecutive Day in the Red?

Bob Mason

Economic Calendar:

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 another bearish day for the European majors on Wednesday, with the CAC40 sliding by 2.85% to lead the way down. The DAX30 and EuroStoxx600 weren’t far behind, with losses of 2.56% and 1.94% respectively.

There was plenty for the markets to consider mid-week, all of which contributed to the downside on the day.

Economic data was on the lighter side, however, leaving the majors in the hands of Powell, corporate earnings, COVID-19, and China.

A reported rise in cases in both China and South Korea led to a shift in sentiment towards government plans to ease lockdown measures this week.

On the corporate earnings front, banks were in focus as Commerzbank and ANB AMRO disappointed on Wednesday.

Tensions between China and the U.S didn’t help. On Tuesday, news had hit the wires of proposed legislation to roll out sanctions on China. The U.S is requesting China to deliver a summary of events that led to the COVID-19 outbreak….

Later in the European session on Wednesday, Fed Chair Powell’s scheduled speech also garnered plenty of attention. The FED Chair’s Powell added to the market angst on the day, by talking of a possibly prolonged recession.

The Stats

It was another quiet day on the Eurozone economic calendar on Wednesday. Eurozone industrial production figures for March failed to move the dial, in spite of better than forecasted figures.

In March, industrial production tumbled 11.30%, following a 0.1% decline in February. Economists had forecast a 12.0% decline.

According to Eurostat,

  • The production of durable consumer goods slumped by 26.3%, capital goods by 15.9%, and intermediate goods by 11.0%.
  • There were also declines in the production of energy (-4.0%)) and non-durable consumer goods (-1.6%).
  • By member state, Italy (-28.4%), Slovakia (-20.3%), and France (-16.4%) reported the heaviest declines.
  • Ireland (+15.5%) and Greece and Finland (both +0.9%) reported rises in industrial production.
  • Year-on-year, industrial production fell by 12.9% across the Eurozone in March.

From the U.S, April wholesale inflation figures had a muted impact on the majors later in the day, with the markets focused on Powell.

The Market Movers

For the DAX: It was a particularly bearish day for the auto sector on Wednesday. Continental led the way, tumbling by 6.86%. Daimler and Volkswagen weren’t far behind, with losses of 4.91% and 4.85% respectively. BMW saw a more modest 3.28% loss on the day.

It was also a bearish day for the banks. Deutsche Bank slid by 4.45%, while Commerzbank tumbled by 7.09%. 1st quarter earnings sank Commerzbank on the day.

Deutsche Lufthansa fell by a modest 1.20%.

From the CAC, the banking sector saw more red on Wednesday. BNP Paribas fell by 4.74%, with Credit Agricole and Soc Gen seeing losses of 2.56% and 4.76% respectively.

It was also a bearish day for the auto sector. Peugeot slid by 5.97%, while Renault slipped by 0.51%.

The prospects of a deep recession added further pressure on travel stocks. Air France-KLM and Airbus SE fell by 2.57% and by 3.16% respectively.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX, which rose by 6.78% on Wednesday. Following on from a 19.84% surge on Tuesday, the VIX ended the day at 35.3.

Concerns over the U.S government reopening the economy too early and dovish chatter from FED Chair Powell weighed on the U.S equity markets mid-week.

There was also the rise in tension between the U.S and China to add to the market angst on the day.

On Wednesday, the S&P500 fell by 1.75%, with the Dow and NASDAQ declining by 2.17% and by 1.55% respectively.

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Finalized April inflation figures are due out of Germany and Spain along with the ECB’s Economic Bulletin.

With the markets expecting inflationary pressures to vanish, expect the ECB Economic Bulletin to garner greater interest on the day.

From the U.S, the weekly jobless claims figures will also have a material impact on the majors.

Expect another surge in jobless claims to weigh heavily on risk appetite.

Outside of the numbers, COVID-19 updates and chatter from Beijing and Washington will also need monitoring.

The Latest Coronavirus Figures

On Wednesday, the number of new coronavirus cases rose by 79,361 to 4,416,823. On Tuesday, the number of new cases had risen by 81,022. Last Wednesday, there had been an 87,960 increase in new cases.

France, Germany, Italy, and Spain reported 3,225 new cases on Wednesday, which was down from 4,176 new cases on Tuesday. On the previous Wednesday, 9,651 new cases had been reported.

From the U.S, the total number of cases rose by 18,315 to 1,426,889 on Wednesday. On Tuesday, the total number of cases had risen by 22,740. On Wednesday, 6th May, the total new number of cases had risen by 20,715.

In the futures markets, at the time of writing, the Dow was up by 50 points.

This article was originally posted on FX Empire