European markets: a difficult start to the week

  •   05/05/2020 - 14h30
  •   DEHOUI Lionel

In this atmosphere of acute crisis, the weeks follow one another, but the news are not the same, for good reason, the Covid-19. It is true that last week was rich in information. But the one that starts today starts on a bad note. In other words, this week is in trouble from day one. The European stock exchanges are starting off on the wrong foot. Here's what's going on.

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European markets: a difficult start to the week
Image copyright: Rock Cohen - Flickr

European Stock Exchanges

The stock markets are in spectacular plunge at the beginning of this week. It should be noted that their different values are recorded at the pace of the final PMI IHS Markit. The latter is related to the euro zone and falls sharply from 44.5 in March to 33.4 in April. This is its lowest level since June 1997 (the month of the survey launch). It surpassed its record during the financial crisis of 2009.

This value bears witness to the significant deterioration of the economic situation at the beginning of the second quarter. According to IHS Markit chief business economist Chris Williamson, PMI information predicts a quarterly decline. It is estimated at 10 % and concerns industrial activity. According to Chris Williamson, the recovery in the manufacturing sector could be slow, to the detriment of hopes. Coming back to the various European stock exchanges (Paris, Frankfurt and London), the recovery started at -4.1%, -3.4% and -0.3% respectively.

Information: Traders will have to take another look at the composite PMI indices in the coming days. They will also focus on March industrial production in France and Germany. But April's employment report will have to interest them on the US side.

 

Expectations in the coming days

With the different values recorded for this beginning of the week, it is clear that the whole week is in danger. Investors, shareholders and governments alike will be focusing on the earnings season. It will certainly continue throughout the week. They are looking at companies such as ArcelorMittal, AB InBev, BNP Paribas, Fiat Chrysler or Siemens in Europe. In the United States, DuPont de Nemours, ViacomCBS or Walt Disney will be expected.

 

Ryanair falls

It is obvious that these different companies are called upon to give information during the week. If their values come out later, others are already known at the beginning of the week which starts with difficulty. The result of the Ryanair group (-2,2 %) is just one example among many in London.

In addition, the low-cost airline Ryanair has unveiled its ambition to make 3,000 redundancies among its employees. It also specifies that this wave of redundancies concerns its cabin crew as well as its pilots. It is well there a measure found by the Ryanair group to face the crisis of Covid-19 which is without precedent.

Information: The list of falls continues with the UBS Group declining by 4.4% on the Zurich stock exchange. Before addressing the case of Berenberg, let us recall that it has downgraded its recommendation to buy to keep. His target price was raised from 10.5 to 11 Swiss francs. Berenberg is therefore offering investors the opportunity to take a break and take a breather.