In This Article:
Economic Calendar:
Friday, 12th March
German CPI (MoM) (Feb) Final
French CPI (MoM) (Feb) Final
French HICP (MoM) (Feb) Final
Spanish CPI (YoY) (Feb) Final
Spanish HICP (YoY) (Feb) Final
The Majors
It was a particularly bearish day for the European majors on Thursday, as the equity market rout gathered pace.
The DAX30 and CAC40 led the way down, with losses of 12.24% and 12.28%, while the EuroStoxx600 saw a more modest 11.48% tumble.
U.S President Trump blamed Europeans and banned travel from Europe in a national address on Wednesday that sank the majors.
The reversal was reported to be the worst day on record, with the markets shunning economic data and central back action on the day.
There was no support from the U.S markets, which also were in freefall as the markets also responded further to the WHO’s reclassification of the coronavirus as a pandemic. The WHO also highlighted the inaction of governments and failings to contain the spread of the virus.
The Stats
It was a relatively busy day on the Eurozone economic calendar on Thursday. Key stats included Eurozone industrial production figures for January.
According to Eurostat,
Industrial production rose by 2.3% in January, following a 1.8% slide in December.
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The production of intermediate goods and capital goods rose by 3.2% and by 2.6% respectively.
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There were also increases in the production of non-durable consumer goods (0.8%) and durable consumer goods (0.7%).
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Energy production fell by 0.1%, however.
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By member state, Ireland (+5.7%) registered the largest increase in industrial production, while Latvia (-1.9%) recorded the largest fall.
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Year-on-year, industrial production was down by 1.9%.
The numbers had a muted impact on the majors, however. The markets are more interested in February and March numbers. There was also the ECB’s monetary policy decision, which was the main event of the week.
Later in the day, the ECB left interest rates unchanged at 0.25% and deposit rates unchanged at -0.5%.
Following moves by the BoE, the BoC, the FED, and the RBA, the markets had expected a rate cut, with the hold adding further pressure on the European majors.
While holding rates unchanged, the ECB did expand the asset purchasing program, while also supporting bank liquidity. The ECB announced that banks would be able to borrow at an interest rate of -0.75% to support lending to businesses and customers.
What was less surprising was Lagarde’s call on governments and other policy institutions to not only mitigate the economic impact of the virus but target containment measures.