Quieter start of the week with all indices trading below their AVATs. Lots of encouraging virus updates throughout the weekend with Germany partially opening its economy today and various countries starting to see a decrease in fatalities (Spain, UK, Italy and also NY). Despite that, lockdowns remain in place for most of Europe, with the political downside of opening early still outweighing the economic benefits (for now). EU equities ticked higher at the open but have since turned to trade in the red. Focus this week will be further stimulus updates (Mnuchin signalled that a new aid package is on the way overnight), any more news in the oil space and of course, Q1 earnings (especially EU banks, which remain amongst the losers).

Although Chinese economic data didn’t show any positive signs this morning (YTD GDP fell to -6.8% vs est. -6% and YoY Retail sales to -15.8% vs est. -10%), equities surged after the White House set a three phase plan to reopen the economy overnight and some positive results from a trial of Gilead’s covid-19 drug (remdesivir). Volumes spiked and we are seeing most EU indices trading above their AVATs. The IBEX is the only exception, which is fair given recent volumes were driven by BBVA. Investors have their risk-on mood and amongst the SXXP sectors, Travel & Leisure is the top performer and Healthcare the worst.

Fairly quieter day after yesterday’s sell off although we should consider that volumes are lower today (on an up day) vs yesterday’s. The S&P had its worst day in 2 weeks and the Russell closed down -4.3% overnight. Short term support levels are at 2600 / 2621 on the S&P and 1252 / 1266 on the Russell.  Here in EU, equities erased some of the losses at the open but have since traded sideways. Our main concern remains the FTSE MIB, which faltered below the Dec 2018 low of 17914 yesterday. Short-term support is at 16000 / 16400 – worth keeping an eye on it.

European equities have turned to trade in the red since the open as earnings are starting to show the consequences of Covid-19. Second round of US banks recently reported and as expected, neither have surprised us. BoA, Citi and GS all had a bad Q1 – BoA mainly due to reserve build, GS mainly impacted by asset management losses and Citi’s focus will be on credit (despite a good top-line). Here in Europe, Banks continue to underperform (currently the worst sector of the SXXP) with relative lows for Banco Santander, Intesa SanPaolo, Caixa Bank, Danske Bank and Standard Chartered.

Signs of life in the Chinese trade data coupled with the agreement by Eurozone Finance Ministers at the back end of last week around their COVID response has seen Europe start the week on the right foot. Over the weekend, we also saw OPEC+ come back to the negotiating table and establish a new output agreement. Stuart Joyner, our spec sales sees “clear upside risk to our forecasts for $35/bbl Brent in 2020 and $40/bbl in 2021”. Be aware though that we have seen WTI fade intraday. All in all though we have returned from the break with a lot to be positive about, however today also marks the beginning of a new earnings season and one that will likely not be forgotten for some time to come. Volumes wise, we are having a quieter day today with the Stoxx 600 currently trading -25% below its 10day AVAT.

European equities celebrated the last morning before the Easter break with cyclicals leading the rally. They ticked higher at the open and although they retraced most gains quite quickly, all sectors have now turned to turn in the green. Volumes feel healthy with the DAX being the highlight. The index is currently trading +87% and +30% above its 1d and 10d turnover AVATs (main winner includes SAP, trading 26% above its 10day AVAT) . As we take a pause before the break, perhaps is worth reminding ourselves where we are. As our charts team highlighted, we would like to see first support levels to hold to sustain the upside momentum. We are watching 8000 support for the Nasdaq, 2640/2650 for the S&P and 10000 for the DAX.

EU equities are having a pause for breath today after EU finance ministers failed to agree on a plan to support the economy. We probably saw it coming after the wobble yesterday afternoon so is this the end of a bear market bounce? All indices have been trading in the red since the open but encouragingly volumes have been low as well (the SXXP is currently trading -37% and -39% below its 1d and 30d AVAT respectively). Feels like investors have taken a well earned moment to digest the latest macro and company updates ahead of the Easter break.

Another encouraging day as we are seeing a healthy bounce accompanied by a spike in volumes across the board. The virus seems to be further stabilising in Europe and investors are once again showing signs of risk appetite. All EU indices are at least 3% up and it is definitely nice to see them trading above their 10day AVATs. We saw the Nasdaq (8000/8011), S&P 500 (2640/2650) and the DAX (10000) breaking their resistance levels yesterday so fingers crossed the trend continues.  

Nice to start the week on the right foot as European equities followed Asia and are having the first proper bounce in the quarter. All indices and sectors are trading in the green and investors have definitely got their risk-on mood back. Latest stats on Covid-19 are helping the boost and although some countries are still yet to see a peak in virus cases, it looks like Europe is close to turning a corner. We have seen a pick-up in volumes across the board and cyclicals are back outperforming vs defensives.

Quiet end of the week but I’m sure many are looking forward to watch the virtual Grand National tomorrow at 5pm. It will definitely be a different one this year but we should make the most of it. All bets will be donated to the NHS so start putting yours in and make sure you stock your fridge!