EU equities have been trading quite mixed since the open as we are seeing half of the sectors and nearly all indices trading in the red. Volumes remain low and as our charts team highlighted this morning, it is quite disappointing seeing some indices stalled at their 2018 lows of their respective resistance levels. In the US, the Nasdaq 100 is testing the 9000 resistance once again and here in Europe, the FTSEMIB is stuck at the 2018 low of 17914.
Although European equities have been trading up since the open (as lockdown measures continue to ease), we should consider that it has been a quieter day overall. We are seeing lower volumes across the board and EU indices are back trading below their AVATs. Maybe a sign of exhaustion? Seems like investors are lacking a bit of conviction at the moment and are waiting for more progress in the lockdowns easing and/or a vaccine development.
After the long weekend in Europe, EU equities aligned with Friday’s losses and tumbled at the open. The S&P was down (-2.8%) on a Friday for the first time in 4 weeks and the FTSE was down -2.3% (currently -0.2%). Today, all EU indices are down at least -3% and volumes are pretty mixed across the board. All indices are trading above their 20d AVAT except for the FTSE 100 and the IBEX (both trading -6% and -23% below their 20d respectively).
Volumes continue to build up as we progress through the week. Participation spiked across the board as we are seeing all EU indices trading well above their AVATs. The news from Gilead yesterday has certainly given investors something to cheer about, however the negative GDP data today meant EU equities weren’t able stay in the green for long. Eurozone Q1 preliminary GDP contracted -3.8% QoQ and -3.3% YoY. This data only covers 2 weeks of lockdown so we expect Q2 GDP data to be even worse (i.e. -20-30% QoQ). This echoes what we saw across the pond last night with the US also disappointing. On the positive side though, US unemployment data showed signs of improvement as Initial Jobless Claims decreased to 3839k from 4427k previously.
Busy day of earnings accompanied with mixed volumes across the board. We were seeing higher volumes this morning but they have decreased slightly. Encouragingly though, all EU indices are still trading above their 5d and 10d AVATs.
Quiet start to the week for most markets as investors wait to hear more from both governments (on the next steps to reopen the economies) and Central Banks (on further stimulus measures). Asian equities closed in the green, boosted by the BoJ announcing more stimulus and EU equities have followed that trend. All indices are trading up by at least +1.5% and seem likely to stay in the green.
Another busy morning ahead of a well-deserved weekend! We had negative news overnight after the WHO published a draft paper suggesting that Gilead’s covid-19 drug (remdesivir) study failed. Our Pharma analyst has suggested that we should wait though as bigger studies are still underway. Elsewhere, the latest US Aid Package got through the White House overnight and is subject to Mr. Trump’s approval today. Apparently another package is on its way so let’s see if we hear anything else on that front this afternoon. Here in Europe, leaders managed to come up with an agreement in the short-term (worth €540 billion) but failed to agree on a long-term plan.
Right into the mix now in earnings season as we heard from multiple companies across different sectors. Oil erased some of its recent losses overnight, which has brought some positivity back to the market (CL1 16.69 and CL2 22.62). We are seeing a slight pickup in volumes as well but overall they are still quite low vs last week. Investors’ focus remains on the EU Council meeting at 2pm this afternoon so keep an eye on it. European equities have been trading mixed since the open with 11 of its sectors trading in the green. Banks are amongst the winners and Retailers are leading the losers.
Although we had a busy morning full of earnings updates and macro news, it does feel like investors have taken a pause for breath as they try to figure out what are the real implications of the recent move in Oil. Volumes are lower across the board with all EU indices trading below their AVATs. Focus is now the video conference with the EU council members tomorrow afternoon (with the risk of Italy falling out with the EU) and of course, any noise on the Oil output cuts front.
Oil is back in the spotlight today after the May WTI collapsed below zero overnight. It managed to trade just above water this morning but it is now back trading in the negative territory (CL1 $-4.77). Adding to the bad mix (and as predicted by our oil specs sales), June WTI (CL2) also plunged and is now trading at $14.47. We remain cautious in the sector and reiterate that the only way oil prices can recover is by addressing the oversupply issue in the short-term. SXEP remains the looser today (-5%) although not quite new relative lows.