Lack of Nvidia afterhours movement highlights investor caution over AI rally

EU mid-market update: 25% tariff threat and weak earnings causes slump across Europe; Lack of Nvidia afterhours movement highlights investor caution over AI rally.

Notes/observations

- European markets trading lower as investor sentiment soured following Trump’s announcement of a forthcoming 25% tariff on EU imports, including cars and other goods. Auto stocks bore the brunt of the selloff, with Volkswagen, BMW, Mercedes-Benz, Stellantis, and Porsche leading declines.

- Earnings adding to the jitters. Telefonica dropped on lower adjusted earnings and AXA fell despite beating forecasts, while a surprise 15% surge in Rolls-Royce shares, fueled by raised medium-term targets and a £1bn buyback.

- For AI/tech, Nvidia’s Q4 report delivered a headline beat in EPS and revenue, yet a mixed outlook and cautious CEO comments sparked a post-earnings decline. Closed after hours red but since turned green in premarket.

- Spain’s inflation rate climbed to an eight-month high of 3% in February, in line with expectations, driven by rising electricity prices. However, core inflation eased to 2.1%, its lowest since December 2021. Italy’s manufacturing confidence index edged higher to 87, reflecting a softer degree of pessimism, though new orders and production remained weak.

- European natural gas futures bounced 6% to about €44/MWh from recent lows, though gold futures slid to two-week lows amid a stronger US dollar and rising Treasury yields.

- Focus turns to Friday’s US PCE inflation report, the Fed’s preferred gauge, which could sway rate cut bets. Trump’s tariff plans, due April 2nd, remains a wildcard, with mixed signals on Canada/Mexico offering slight CAD and MXN relief.

- Asia closed mixed with NZX50 outperforming +0.7%. EU indices +0.2% to -1.2%. US futures +0.2-0.6%. Gold -1.0%, DXY +0.1%; Commodity: Brent +0.9%, WTI +1.0%; Crypto: BTC -3.2%, ETH -5.0%.

Asia

- New Zealand Feb ANZ Business Confidence: 58.4 v 54.4 prior.

- Australia Q4 Private Capital Expenditure: -0.2% v +0.5%e.

- South Korea Q4 Short-Term External Debt: $146.9B v $158.7B prior.

- RBA Dep Gov Hauser noted that it was expecting more positive news on inflation but tightness of labor markets was a challenge.

- China PBOC Dep Gov Zou Lan noted that issuance of special Treasury Bonds to help major state-owned banks. To help major state-owned banks replenish their Common Equity Tier 1 (CET1) capital. strengthening capital reserves would enhance banks' ability to manage risks and support the real economy.

- Japan Top FX Diplomat Mimura stated that did not see any disparity between recent Yen currency moves and recent positive GDP and domestic inflation data. Noted that Yen’s recent rise was aligned with economic fundamentals.

Europe

- ECB's Stournaras (Greece) stated that it was too early to discuss pausing cuts as they remain restrictive. ECB should keep cutting rates to 2%.

- Ireland Feb Consumer Confidence Index: 74.8 v 74.9 prior.

Americas

- Treasury Sec Bessent noted that was paying particular attention to the 10-year treasury yield, believed Trump's policy should reduce it. Aimed to reduce spending and easy monetary policy at the same time.

- US Commerce Sec Lutnick confirmed April 2nd is the baseline reciprocal tariff date.

- Trump admin said to have proposed to affix levies reaching $1.5M on Chinese-made ships arriving at American ports.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.38% at 557.54, FTSE +0.21% at 8,749.80, DAX -0.98% at 22,575.00, CAC-40 -0.24% at 8,124.00, IBEX-35 -0.29% at 13,297.30, FTSE MIB -1.24% at 38,740.00, SMI -0.16% at 13,018.90, S&P 500 Futures +0.55%].

Market focal points/key themes: European indices open lower across the board and remained under pressure through the early part of the session; tariff concerns seen weighing on risk appetite with the automotive sector showing the largest decline, dragging on the DAX; better performing sectors include telecom and energy; sectors leading the way lower include industrials and communication services; focus on ECB minutes and US durable goods figures to be released later in the day; earnings expected in the upcoming US session include Hormel, Dell, Autodesk and Royal Bank of Canada.

Equities

- Energy: Engie [ENGI.FR] +6.0% (earnings), Eni [ENI.IT] -1.5% (earnings) - Financials: AXA [AXA.DE] -1.5% (earnings), London Stock Exchange [LSEG.UK] +2.5% (earnings), Swiss Re [RUKN.CH] +2.5% (earnings; CA wildfires impact), Aviva [AV.UK] +1.5% (FY results).

- Industrials: Rolls-Royce [RR.UK] +14.5% (FY results, launches £1.0B share buyback), Stellantis [STLA.NL] -3.0% (US Pres Trump: EU tariffs will be 25% on autos and other things), Kion [KGX.DE] +5.5% (FY results) - Technology: ASML Holding [ASML.NL] -1.0% (NVDA results weigh on chip sector) - Telecom: WPP [WPP.UK] -18.0% (earnings), Telefonica [TEF.ES] -1.5% (Q4 results, misses estimates)

Speakers

- Thailand govt said to be working on a master plan to achieve 3.5% GDP growth

- China govt said to 'step up' scrutiny of capital flows by domestic companies and their use of proceeds from stock sales in Hong Kong amid yuan currency depreciation

- China Defense Ministry confirmed it held drills in Taiwan Strait.

Currencies/fixed income

- FX price action continued its low volatility as market reactions to tariff threats from President Trump had been relatively muted so far. Dealers noted that many threats had yet to be carried through with speculation that US was considering delaying hefty tariffs on Canada and Mexico by another month.

- EUR/USD remained below the 1.05 level with a slew of EU inflation data coming out over the next few session. ECB to meet in a week’s time and almost certainly lower interest rates again. However, some recent ECB speak has highlighted resistance to additional monetary easing afterwards. The Spanish Feb CPI did register a steady reading at 2.9%.

- GBP/USD rose slightly higher during the session to test 1.2670.

- USD/JPY moved higher aided by higher US Treasury yields. Pair re-approaching the 150 level by mid-session.

- The US 10-year Treasury yield higher by almost 5bps at 4.30%; 10-year German Bund yield at 2.44% and 10-year Gilt yield at 4.50%.

Economic data

- (NL) Netherlands Feb Producer Confidence-1.6 v -1.6 prior.

- (FI) Finland Feb Consumer Confidence: -9.0 v -8.4 prior; Business Confidence: # v -7 prior.

- (FI) Finland Jan House Price Index M/M: -0.9% v +1.0% prior; Y/Y: +0.4% v -1.1% prior.

- (SE) Sweden Jan Trade Balance (SEK): 15.1B v 5.4B prior.

- (SE) Sweden Jan Household Lending Y/Y: 1.8% v 1.6% prior.

- (NO) Norway Jan Trend Unemployment Rate: 3.9% v 3.9% prior.

- (FI) Finland Dec Final Trade Balance: -€0.1B v -€0.1B prelim.

- (DK) Denmark Jan Retail Sales M/M: 0.3% v 0.2% prior; Y/Y: 5.4% v 1.7% prior.

- (TR) Turkey Feb Economic Confidence: 99.2 v 99.7 prior.

- (TR) Turkey Jan Final Trade Balance: -$7.5B v -$7.7Be.

- (HU) Hungary Jan Unemployment Rate: 4.4% v 4.5%e.

- (FR) France Feb PPI M/M: 0.7% v 0.9% prior; Y/Y: -2.1% v -3.8% prior.

- (TW) Taiwan Jan Monitoring Leading Indicator: # v 38 prior.

- (CH) Swiss Q4 GDP Q/Q: 0.2% v 0.2%e; Y/Y: 1.5% v 1.6%e; Sport Event Adjusted GDP Q/Q (final): 0.5% v 0.4% prelim.

- (ES) Spain Feb Preliminary CPI M/M: 0.4% v 0.4%e; Y/Y: 3.0% v 3.0%e.

- (ES) Spain Feb Preliminary CPI EU Harmonized M/M: 0.4 % v 0.4%e; Y/Y: 2.9% v 2.9%e; CPI Core Y/Y: 2.1% v 2.3%.

- (SE) Sweden Feb Consumer Confidence: 95.0 v 98.3 prior; Manufacturing Confidence: 95.6 v 94.8 prior; Economic Tendency Survey: 97.1 v 97.4 prior.

- (EU) Euro Zone Jan M3 Money Supply Y/Y: 3.6% v 3.8%e.

- (IT) Italy Feb Consumer Confidence: 98.8 v 98.5e; Manufacturing Confidence: 87.0 v 87.0e; Economic Sentiment: 94.8 v 95.7 prior.

- (IS) Iceland Feb CPI M/M: +0.9% v -0.3% prior; Y/Y: 4.2% v 4.6% prior.

- (PL) Poland Q4 Final GDP Q/Q: 1.3% v 1.3% prelim; Y/Y: 3.2% v 3.2% prelim.

- (ZA) South Africa Jan PPI M/M: 0.5% v 0.2% prior; Y/Y: 1.1% v 1.0%e.

- (PT) Portugal Feb Consumer Confidence: -15.3 v -15.1 prior; Economic Climate Indicator: 2.7 v 2.8 prior.

- (EU) Euro Zone Feb Economic Confidence: 96.3 v 95.9e; Industrial Confidence: -11.4 v -12.0e; Services Confidence: 6.2 v 6.8e; Consumer Confidence (final): -13.6 v -13.6 advance.

- (IT) Italy Dec Industrial Sales M/M: -2.7% v 1.4% prior; Y/Y: -7.2% v -2.5% prior.

Fixed income issuance

- (IN) India sold total INR330B vs.INR330B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK180M in 3-month and 6-month bills.

- (UK) DMO sold £3.25B in 4.375% Jan 2040 Gilts; Avg Yield: 4.836%; bid-to-cover: 2.89x; Tail: 0.6bps.

- (IT) Italy Debt Agency (Tesoro) sold total €6.75B vs. €5.75-6.75B indicated range in 5-year and 10-year BTP Bonds.

- Sold €3.75B vs. €3.25-3.75B indicated range in new 2.95% July 2030 BTP bonds; Avg Yield: 2.93% v 2.95% prior; Bid-to-cover: 1.54x v 1.64x prior.

- Sold €3.0B vs. €2.5-3.0B indicated range in 3.65% Aug 2035 BTP bonds; Avg Yield: 3.55% v 3.60% prior; bid-to-cover: 1.63x v 1.85x prior.

- (IT) Italy Debt Agency (Tesoro) sold €2.75B vs. €2.5-2.75B indicated range in Apr 2033 floating rate bonds (CCTeu); Real Yield: 4.11% v 4.11% prior; bid-to-cover: 1.61x v 1.58x prior.

Looking ahead

- (EU) G20 Finance Ministers and central banks meeting (ECB’s Lagarde and Cipollone attend).

- (BR) Brazil Jan Central Govt Budget Balance (BRL): No est v 24.0B prior.

- (BR) Brazil Jan Total Federal Debt (BRL): No est v 7.316T prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (BE) Belgium Feb CPI M/M: No est v 1.4% prior; Y/Y: No est v 4.1% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (BR) Brazil Feb FGV Inflation IGPM M/M: 1.0%e v 0.3% prior; Y/Y: 8.4%e v 6.8% prior.

- 06:30 (BR) Brazil Jan Current Account Balance: -$9.0Be v -$9.0B prior; Foreign Direct Investment (FDI): $5.8Be v $2.8B prior.

- 07:00 (CA) Canada Feb CFIB Business Barometer: No est v 54.6 prior.

- 07:00 (BR) Brazil Jan National Unemployment Rate: 6.6%e v 6.2% prior.

- 07:00 (MX) Mexico Jan Trade Balance: -$3.8Be v $2.6B prior.

- 07:00 (MX) Mexico Jan Unemployment Rate: 2.7%e v 2.4% prior; Unemployment Rate (seasonally adj): No est v 2.6% prior.

- 07:00 (RO) Romania to sell RON500M in 6.75% Apr 2035 Bonds.

- 07:30 (EU) ECB Publishes Account of Jan. 29-30 Policy Meeting (aka Minutes).

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Q4 Preliminary GDP Annualized Q/Q (2nd of 3 readings): 2.3%e v 2.3% advance; Personal Consumption: 4.1%e v 4.2% advance.

- 08:30 (US) Q4 Preliminary GDP Price Index: 2.2%e v 2.2% advance; Core PCE Price Index Q/Q: 2.5%e v 2.5% advance.

- 08:30 (US) Jan Preliminary Durable Goods Orders: +2.0%e v -2.2% prior; Durables (ex-transportation): 0.3%e v 0.3% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.3%e v 0.4% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.3%e v 0.5% prior.

- 08:30 (US) Initial Jobless Claims: 221Ke v 219K prior; Continuing Claims: 1.87Me v 1.869M prior.

- 08:30 (CA) Canada Q4 Current Account Balance: -$4.3Be v -$3.2B prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:15 (US) Fed’s Schmid.

- 10:00 (US) Jan Pending Home Sales M/M: -0.9%e v -5.5% prior; Y/Y: -1.0%e v -2.9% prior.

- 10:00 (US) Fed’s Barr.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (US) Feb Kansas City Fed Manufacturing Activity: -5e v -5 prior.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 11:45 (US) Fed’s Bowman.

- 12:00 (CA) Canada to sell 30-year Bonds.

- 13:15 (US) Fed's Hammack Keynote Speech at Conference.

- 15:15 (US) Fed’s Harker.

- 16:00 (NZ) New Zealand Feb ANZ Consumer Confidence: No est v 96.0 prior.

- 16:45 (NZ) New Zealand Jan Filled Jobs M/M: No est v 0.1% prior.

- 18:30 (JP) Japan Feb Tokyo CPI Y/Y: 3.2%e v 3.4% prior; CPI Ex-Fresh Food Y/Y: 2.3%e v 2.5% prior; CPI Ex-Fresh Food, Energy Y/Y: 2.0%e v 1.9% prior.

- 18:50 (JP) Japan Jan Preliminary Industrial Production M/M: -1.1%e v -0.2% prior; Y/Y: +2.8%e v -1.6% prior.

- 18:50 (JP) Japan Jan Retail Sales M/M: +0.6%e v -0.8% prior (revised from -0.7%); Y/Y: 3.9%e v 3.5% prior (revised from 3.7%); Dept. Store, Supermarket Sales Y/Y: No est v 2.9% prior.

- 19:01 (UK) Feb Lloyds Business Barometer: No est v 37 prior.

- 19:30 (AU) Australia Jan Private Sector Credit M/M: No est v 0.6% prior; Y/Y: No est v 6.5% prior.

- 20:00 (PH) Philippines Jan Trade Balance: -$4.8Be v -$4.1B prior; Exports Y/Y: -7.0%e v -2.2% prior; Imports Y/Y: +0.3%e v -1.7% prior.

- 21:00 (SG) Singapore Jan M2 Money Supply Y/Y: No est v 6.0% prior; M1 Money Supply Y/Y: No est v 8.8% prior.

- 22:30 (JP) Japan to sell 3-Month Bills.

- 23:00 (TH) Thailand Jan ISIC Manufacturing Production Y/Y: -2.9%e v -2.1% prior; Capacity Utilization: No est v 56.0% prior.