Wednesday, 10th April 2019
- ECB Interest Rate Decision (Apr)
- ECB Press Conference
Thursday, 11th April 2019
- German CPI m/m (Mar) Final
- French CPI m/m (Mar) Final
- French HICP m/m (Mar) Final
Friday, 12th April 2019
- Spanish CPI (YoY) (Mar) Final
- Spanish HICP (YoY) (Mar) Final
- Eurozone Industrial Production m/m (Feb)
The European majors saw red for a 2nd consecutive day on Tuesday. The DAX slid by 0.94% to lead the way down once more. Not far behind were the CAC40 and EuroStoxx600, which ended the day down 0.65% and 0.47% respectively.
There were no material stats released through the European session to provide direction to the majors, leaving the majors exposed to sentiment towards growth and geopolitical risks throughout the day.
The European markets got hit from all sides on Tuesday. The lingering threat of tariffs on the EU moved ever close to reality. President Trump threatened the EU with tariffs on $11bn worth of imports of goods. The tariffs are in response to subsidies that Airbus receives, which the U.S administration considers damaging to the U.S.
It’s all about the battle for air supremacy and Airbus and Boeing have been at it for some time. The timing of Boeing’s recent troubles over Boeing 737 Max and the threat of tariffs is perhaps no coincidence.
While the news of tariffs is certainly bad news, coming at a time when economic growth prospects already look grim, the IMF also delivered a blow.
Growth forecasts for the Eurozone were cut from 1.6% to 1.3% for 2019.
Looking across the majors, Deutsche Bank slid by another 1.1%, while Commerzbank managed to end the day in the green. The mixed day for the financial sector comes ahead of the first set of major earnings results out of the U.S, which will influence the European majors on Friday.
Weaker growth forecasts and the threat of tariffs could give the U.S administration more reason to go after the EU’s auto sector, which has been under a dark cloud of late.
The Day Ahead
It’s another quiet day ahead on the economic calendar. With no material stats scheduled for release out of the Eurozone, the focus will be on this afternoon’s ECB monetary policy decision and press conference.
While talk of further monetary policy easing may be considered positive for the equity markets, more doom and gloom over the economic outlook is not. We saw the European major hit reverse at the last ECB press conference in spite of a slide in the EUR. There could well be another slide on the way.
The prospect of a U.S – EU trade war has just escalated and, with the U.S – China trade negotiations ongoing and the IMF downwardly revising growth, Draghi will likely be in his element.
Unlike the FED, the ECB has been less concerned with the effects of forward guidance on the global financial markets.
One curveball through the day will be progress or lack of progress on Brexit. The EU’s emergency Brexit Summit kicks off today. Hopes are for EU member states to vote in favor of an extension. Market panic would certainly ensue should any EU member state voting against the extension request…
At the time of writing, the futures pointed to a mixed open. The DAX30 was up 3.5points, while the CAC40 was pointing to a 35 point loss at the open.
This article was originally posted on FX Empire
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