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U.S Economic Data, U.S Politics, and COVID-19 in Focus

The Majors

It was a bearish start to the week for the European majors on Monday. The DAX30 slid by 3.71%, with the EuroStoxx600 and CAC40 declining by 1.81% and by 1.90% respectively.

Disappointing business sentiment figures for Germany sent the DAX30 into the deep south on a bearish day for riskier assets.

The market reaction towards the constant surge in new COVID-19 cases across the EU had weighed heavily going into the open.

Adding to the market angst on the day was the lack of progress towards a U.S stimulus package on Capitol Hill.

The Stats

It was a relatively quiet day on the Eurozone economic calendar. Key stats included Germany’s Ifo Business Climate Index and sub-index figures for October.

The Business Climate Index fell from 93.2 to 92.7 in October, with the Business Expectations sub-index falling from 97.4 to 95.0. Sentiment towards the current situation was marginally better, with the sub-index rising from 89.2 to 90.3.

According to the October report,

  • The Business Climate Index fell for the first time in 6-months. A continued rise in new COVID-19 cases weighed on business sentiment.

By sector:

  • In manufacturing, the business climate indicator moved back into positive territory for the 1st time since June-19. The pickup came in spite of waning optimism.
  • In services, the business climate deteriorated notably. Optimism towards the business outlook disappeared, with firms also less satisfied with their current situation.
  • In trade, the Business Climate Index fell marginally. While firms were more pessimistic, companies were more satisfied with their current business situation.

From the U.S

It was also a quiet day on the economic calendar. New home sales figures for September had a muted impact on the European majors.

The Market Movers

For the DAX: It was a particularly bearish day for the auto sector on Monday. Continental and Volkswagen slid by 3.29% and by 2.29% respectively, with Daimler and BMW falling by 1.08% and by 1.07% respectively.

It was also a bearish day for the banks. Deutsche Bank fell by 0.36%, with Commerzbank sliding by 2.80%

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen fell by 1.64% and by 1.30% respectively. Credit Agricole slid by 2.16%, however, to lead the way down.

It was another mixed day for the French auto sector. Peugeot rose by 0.42%, while Renault declined by 1.70%.

Air France-KLM slid by 4.04%, with Airbus SE ending the day with a 4.44% loss.

On the VIX Index

A run of 3 consecutive days in the red came to an end for the VIX on Monday. Reversing a 1.99% fall from Friday, the VIX surged by 17.82% to end the day at 32.46.

COVID-19 updates and a lack of progress towards a U.S Stimulus package weighed heavily on riskier assets on the day.

New COVID-19 cases across the U.S also hit record highs raising concerns that the U.S may need to reintroduce lockdown measures.

On Monday, the Dow slid by 2.29%, with the NASDAQ and S&P500 seeing losses of 1.64% and 1.86% respectively.


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