Manufacturing PMI readings in focus as France hits 24-month high and UK hits 18-month low

EU mid-market update: Manufacturing PMI readings in focus as France hits 24-month high and UK hits 18-month low; Eyes towards UK Spring Statement on Wed and incoming US tariffs.

Notes/observations

- Risk on appetite to start the week, concentrated in US equities with Nasdaq100 futures up >1.2%; For Europe, FTSE 100 holds gains buoyed by optimism over a more targeted approach to US tariff measures and the anticipation of policy tweaks from UK officials ahead of Chancellor Reeves’s Spring Statement on Wednesday. Germany’s DAX has rebounded after last Friday’s losses, with individual gains led by energy and financial names, though caution persists amid tariff talk and mixed domestic data. German Bunds remain in a tug-of-war near critical yield levels.

- French manufacturing activity showed signs of softening its contraction with PMI climbing noticeably above forecasts (48.9 vs 45.8, 25-month high). Meanwhile, the German manufacturing sector is easing its contraction as new orders see a modest uptick and job cuts slow. Composite flash reading points to the strongest private-sector activity in ten months, even as services lose some momentum. Overall, Eurozone composite PMI nudges up but misses expectations, suggesting mixed signals across the bloc.

- Gold futures are edging closer to record highs, riding on a softer US dollar and rising central bank demand, particularly from China.

- Bitcoin is also on an upward swing as risk sentiment improves with expectations that forthcoming US tariffs will be less aggressive.

-Turkish lira continues its slide, pressured by heightened political turmoil following the detention of a key opposition figure and subsequent widespread protests.

- Asia closed mixed with India Nifty50 outperforming +1.3%. EU indices +0.2% to -0.3%. US futures +0.8-1.2%. Gold +0.1%, DXY -0.1%; Commodity: Brent +0.1%, WTI +0.1%; Crypto: BTC +3.5%, ETH +3.7%.

Asia

- Australia Mar Preliminary PMI Manufacturing registered its 3rd month of expansion and highest since 2022 (52.6 v 50.4 prior).

- Japan Mar Preliminary PMI Manufacturing registered its 9th straight contraction (48.3 v 49.0 prior).

- BOJ Gov Ueda testified that could not sell JBG holdings immediately; Had been gradually tapering holdings of govt bonds. Reiterated stance to adjust degree of monetary easing if 2% inflation target likely to be achieved. Policy conduct of BOJ would not be hampered by BOJ's finances.

- BOJ Dep Gov Uchida testified in Parliament that was vital for FX to move in stable manner.

Europe

- Morningstar DBRS cuts France outlook to negative, citing concerns over the country's ability to reduce its fiscal deficit and high public debt ratio.

- UK Chancellor (Fin Min) Reeves confirmed 15% cut to Civil Service running costs by the end of the decade. Savings would be made from back office and administrative roles rather than front-line services. Could also scrap 'digital services tax on tech giants.

Americas

- White House said to be adjusting its tariff strategy ahead of the planned April 2nd rollout; Instead of implementing broad, industry-specific tariffs (such as on cars, pharmaceuticals, and semiconductors), the focus to likely shift to targeted reciprocal tariffs aimed at countries with significant trade ties to the US.

Speakers/fixed income/fx/commodities/erratum

Equities

Indices [Stoxx600 +0.2% at 550, FTSE +0.2% at 8664, DAX +0.3% at 22962, CAC-40 +0.2% at 8058, IBEX-35 +0.4% at 13405, FTSE MIB +0.4% at 3828, SMI -0.2% at 13030, S&P 500 Futures +1.0%].

Market focal points/key themes: European indices open higher across the board and remained positive through the early part of the session; among sectors leading the way higher are materials and financials; while health care and telecom remain stuck in the red; reportedly Argentine government to block Telefonica’s unit sale to Telecom Argentina; Sidara to extend negotiations on John Wood takeover; earnings expected in the upcoming US session include KB homes.

Speakers

- ECB’s Cipollone (Italy) noted that current conditions made further monetary policy easing conceivable. Inflation target might be reached sooner that Staff Projections predicted.

- Malaysia Central Bank (BNM) annual report stressed that policy in 2025 to be guided by risks to both inflation and growth. Saw 2025 Headline CPI between 2.0-3.5% and Core CPI between 1.5-2.5%. BNM maintained its 2025 GDP growth forecast between 4.5-5.5%.

- China Finance Ministry (MOF) Fiscal Implementation Report reiterates govt stance that fiscal policy to be more 'proactive' in 2025; to continue to prevent and resolve risks in key areas. To support all-around expansion of domestic demand.

- China Commerce Minister reportedly met with CEO of Cargill, a US-based agricultural trading house.

Currencies/fixed income

- FX markets were steady during quiet trading on Monday. Major EU PMI readings failed to inspire any fresh position taking.

- GBP/USD at 1.2950 with focus on Wed’s budget statement. Dealers noted that the 1.30 level providing psychology resistance. Cable could be vulnerable ahead of the UK budget as Fin Min Reeves has little wiggle room to spur growth. Markets believe she would either hint at higher taxes or less spending.

- EUR/USD steady at 1.0845 and failed to be inspired by better PMI Manufacturing data out of the region. Markets still pricing approx. 60% change that ECB would continue easing at the upcoming April policy meeting.

- 10-year German Bund yield at 2.76% and 10-year Gilt yield at 4.67%. 10-year Treasury yield at 4.28%.

Economic data

- (FI) Finland Feb PPI M/M: 0.0%e v 1.5% prior; Y/Y: 0.7% v 0.4% prior.

- (MY) Malaysia mid-Mar Foreign Reserves: $118.0B v $118.3B prior.

- (TW) Taiwan Feb Unemployment Rate: 3.4% v 3.4%e.

- (ES) Spain Jan Total Mortgage Lending Y/Y: 18.4% v 44.9% prior; House Mortgage Approvals Y/Y: 11.0% v 30.0% prior.

- (FR) France Mar Preliminary Manufacturing PMI: 48.9 v 46. (26th month of contraction but highest since Jan 2023); Services PMI: 46.6 v 46.0e; Composite PMI: 47.0 v 46.1e.

- (DE) Germany Mar Preliminary Manufacturing PMI: 48.3 v 47.0e (33rd month of contraction); Services PMI: 50.2 v 52.0e; Composite PMI: 50.9 v 51.1e.

- (EU) Euro Zone Mar Preliminary Manufacturing PMI: 48.7 v 48.2e (33rd month of contraction); Services PMI: 50.4 v 51.1e; Composite PMI: 50.4 v 50.5.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 449.2B v 448.5B prior; Domestic Sight Deposits: 440.4B v 440.7B prior.

- (PL) Poland Feb Real Retail Sales M/M: -6.0% v -2.3%e; Y/Y: -0.5% v +3.4%e; Retail Sales (current prices) Y/Y: 0.6% v 4.8%e.

- (UK) Mar Preliminary Manufacturing PMI: 44.6 V 47.2e (6th straight contraction, 18-month low); Services PMI: 53.2 v 51.1e (17th month of expansion, 7-month high); Composite PMI: 52.0 v 50.5e (6-month high).

Fixed income issuance

- None seen.

Looking ahead

- 06:00 (EU) Daily Euribor Fixing.

- 06:30 (DE) Germany to sell combined €4.0B in 3-month and 9-month.

- 06:30 (EU) European Union to sell combined €5.0B in 2030 and 2044 NGEU bonds.

- 07:00 (IL) Israel to sell combined ILS2.3B in 2028, 2029, 2035, 2042 and 2051 bonds.

- 07:00 (RO) Romania to sell RON600M in 7.2% Oct 2026 bonds.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (CL) Chile Feb PPI M/M: No est v 2.2% prior.

- 08:00 (MX) Mexico Jan IGEA Economic Activity Index (Monthly GDP) M/M: -0.2%e v -1.1% prior; Y/Y: 0.0%e v -0.4% prior.

- 08:30 (US) Feb Chicago Fed National Activity Index: -0.17e v -0.03 prior.

- 09:00 (PL) Poland Feb M3 Money Supply M/M: 1.0%e v -0.4% prior; Y/Y: 9.1%e v 9.4% prior.

- 09:00 (CL) Chile Central Bank (BCCh) Quarterly Monetary Policy Report.

- 09:00 (UK) Daily Baltic Dry Bulk Index.

- 09:45 (US) Mar S&P Preliminary Manufacturing PMI: 51.8e v 52.7 prior; Services PMI: 51.0e v 51.0 prior; Composite PMI: 51.3e v 51.6 prior.

- 10:00 (FR) France Debt Agency (AFT) to sell €6.6-8.2B in 3-month, 6-month and 12-month bills (4 tranches).

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 13:45 (US) Fed’s Bostic.

- 14:00 (UK) BOE Gov Bailey.

- 15:10 (US) Fed’s Barr.

- 17:00 (KR) South Korea Mar Consumer Confidence: No est v 95.2 prior.

- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 83.8 prior.

- 19:10 (AU) RBA's Jones hold fireside Chat.

- 22:00 (KR) South Korea Feb Retail Sales Y/Y: No est v 11.7% prior; Department Store Sales Y/Y: No est v 10.3% prior; Discount Store Sales Y/Y: No est v 16.1%.

- 22:00 (KR) South Korea to sell KRW600B in 20-year Bonds.

- 23:00 (TH) Bank of Thailand to sell THB60B in 3-month bills.

- (CN) China PBOC 1-year Medium-Term Lending Facility (MLF) Setting: Expected to leave Rate unchanged at 2.00%.