Plethora of key central bank decisions now behind us

EU mid-market update: Plethora of key central bank decisions now behind us; Tariff and geopolitical tensions regain focus.

Notes/observations

- European markets kicked off in the red, rattled by trade uncertainty and geopolitical friction. After navigating a cluster of rate decisions this week, market focus pivots to US tariffs, confirmed by President Trump to hit on April 2, while the EU’s countermeasures remain stalled. Adding to the unease, EU leaders failed to greenlight €5B for Ukraine ammo, and NATO’s push for a 30% ramp-up in European and Canadian weaponry stoked tensions. Italian FTSE MIB spearheaded declines, retreating from a 17-year peak, with FTSE 100 and DAX trailing lower.

- UK Public borrowing swelled to £10.7B in February, overshooting the £6.6B consensus, fueling fiscal sustainability worries ahead of next week’s budget. Consumer confidence ticked up—highest in three months—but recovery signs stay elusive. UK gilt yields spiked post-borrowing data but pared gains. Sterling wobbled near $1.29 on budget risks.

- German Bundesrat’s (upper house) vote on the debt brake tweak is expected to pass today after Tuesday’s Bundestag (lower house) nod.

- Adidas and Puma slumped after Nike’s numbers disappointed, Asos soared on a robust H1 update, and Beneteau tanked post-FY results.

- A fire at a substation near Heathrow Airport has closed the airport for the day, causing knock on delay affects to peripheral airports and across globe. UK airlines IAG and EasyJet trade lower.

- Natural gas futures climbed to €44/MWh, riding supply fears from Russia-Ukraine skirmishes. Attacks on infrastructure—like Russia’s Sudzha station—slashed hopes of resumed flows, with storage at a thin 34% ahead of winter.

- Asia closed mixed with Hang Seng underperforming -2.2%. EU indices -0.2% to -1.0%. US futures -0.4% to -0.5%. Gold -0.5%, DXY +0.2%; Commodity: Brent -0.2%, WTI -0.1%; Crypto: BTC -2.0%, ETH -1.4%.

Asia

- South Korea Feb PPI Y/Y: 1.5% v 1.8% prior.

- New Zealand Feb Trade Balance (NZD): +0.5B v -0.6B prior.

- Japan Feb National CPI Y/Y: 3.7% v 3.5%e; CPI (Ex Fresh Food) Y/Y: 3.0% v 2.9%e.

Global conflict/tensions

- France Pres Macron to host coalition of willing countries on Ukraine in Paris on Mar 27th.

- Major European powers are working on a 5-10 year plan to replace the US in NATO.

- NATO reportedly to ask the EU and Canada for 30% boost in 'military capacity'.

Europe

- UK Mar GfK Consumer Confidence: -19 v -20e.

Americas

- Pres Trump signed executive order on increasing critical mineral production in the US, invoking Cold War-era emergency powers; Trump stated he expected to sign deal on Ukraine rare earths. soon

- US is looking to reopen terms of minerals deal with Ukraine; US wants to include nuclear plant under Russian control in broader economic agreement.

Speakers/fixed income/fx/commodities/erratum

Equities

Indices [Stoxx600 -0.61% at 549.62, FTSE -0.42% at 8,665.30, DAX -0.67% at 22,859.07, CAC-40 -0.58% at 8,047.12, IBEX-35 -0.37% at 13,257.25, FTSE MIB -0.25% at 39,091.00, SMI -0.47% at 13,037.20, S&P 500 Futures -0.41%].

Market Focal Points/Key Themes: European indices opened generally lower and remained under pressure through the early part of the session; lack of support after a series of central bank meetings seen weighing on risk appetite; among better performing sectors are utilities and telecom; sectors pulling to the downside include materials and consumer discretionary; Munich Re acquires next Insurance; Alfa Laval acquires Fives’ cryogenic unit; Eurozone advance consumer confidence expected later in the day; earnings seen in the upcoming US session include Carnival and NIO.

Equities

- Consumer discretionary: Adidas [ADS.DE] -0.5% (Nike guidance), Asos [ASC.UK] +18.5% (H1 trading update), International Consolidated Airlines [IAG.UK] -3.5% (fire at nearby substation causes Heathrow airport to close all day).

- Industrials: Airbus [AIR.FR] -0.5% (Berenberg raised to hold), Rheinmetall [RHM.DE] -3.5% (US seeks to reopen terms of Ukraine minerals deal - FT), Dassault Aviation [AM.FR] -0.5% (France may order ~30 more Rafale jets), Ferrovial [FER.ES] -1.5% (owner of Heathrow airport; Fire at nearby substation causes airport to close all day) - Materials: Ferrexpo [FXPO.UK] -6.5% (US seeks to reopen terms of Ukraine minerals deal - FT; Operates in Ukraine), Salzgitter [SZG.DE] -1.5% (final FY24 results) - Telecom: BT [BT.A.UK] -1.0% (said to have approached AT&T and Orange on international unit tie-up that could involve selling a stake in its global segment), Tele2 [TEL2B.SE] +2.5% (analyst upgrade).

Speakers

- Iran Supreme Leader Khamenei stated that America could not achieve anything by threats; Iran would deliver harsh blow to any malicious act.

Currencies/fixed income

- FX price action was subdued on Friday with little in terms of major economic news to prompt fresh position taking. USD tried to build upon its Thursday’s gains but the rally found little fresh momentum. Dealers noted that the common theme from the major central banks this week had been to view the impact of a trade war.

- EUR/USD at 1.0835. Markets currently pricing in 14bps of ECB interest-rate cuts in April and 48bps of easing by year-end. German upper house is expected to pass a vote on the spending package already passed Tuesday by the lower house.

- USD/JPY at 149.40. Dealers noted Yen currency weakened for most of the session, much of the momentum reflecting dollar strength. Dealers noted of the diminishing prospects for yen carry trades given BOJ rates are now higher than that of SNB and no longer the lowest in developed markets.

- 10-year German Bund yield at 2.75% and 10-year Gilt yield at 4.68%. 10-year Treasury yield at 4.22%.

Economic data

- (NL) Netherlands Mar Consumer Confidence: -34 v -32 prior.

- (NL) Netherlands Feb House Price Index M/M: 0.1% v 1.6% prior; Y/Y: 10.6%e v 11.5% prior.

- (UK) Feb Public Finances (PSNCR): +£6.4B v -£22.4B prior; Net Borrowing: £10.7B v £7.0Be; PSNB (Ex Banking Groups): +£10.7B v -£13.3B prior; Central Government NCR: +£8.4B v -£15.2B prior.

- (TR) Turkey Mar Consumer Confidence: 85.9 v 82.1 prior.

- (DK) Denmark Mar Consumer Confidence: -15.5 v -14.5 prior.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 256.3K v 255.5K tons prior.

- (TH) Thailand May Foreign Reserves w/e Mar 14th$247.5B v $247.4B prior.

- (FR) France Mar Business Confidence: 97 v 96e; Manufacturing Confidence: 96 v 97e; Production Outlook Indicator: -12 v -13e; Own-Company Production Outlook: 7 v 6e.

- (FR) France Q4 Final Wages Q/Q: 0.4% v 0.4% prelim.

- (CH) Swiss Feb M3 Money Supply Y/Y: 2.3% v 1.7% prior.

- (CZ) Czech Mar Consumer Confidence: 98.8 v 96.7e; Business Confidence: 99.6 v 97.9e; Composite Confidence: 99.5 v 98.1e.

- (RU) Russia Narrow Money Supply w/e Mar 14th (RUB):18.11 T v 18.09T prior.

- (TR) Turkey Feb Foreign Tourist Arrivals Y/Y: -5.3% v +6.1% prior.

- (FR) France Feb Retail Sales Y/Y: -0.2% v -0.5% prior.

- (HK) Hong Kong Q4 Current Account Balance: $96.3B v $119.9B prior; Overall Balance of Payments (BoP): +$31.4B v -$23.0B prior.

- (EU) Euro Zone Jan ECB Current Account Balance: €B v €38.4B prior.

- (IS) Iceland Feb Wage Index M/M: 0.0% v 3.1% prior; Y/Y: 9.0% v 9.1% prior.

- (IT) Italy Jan Current Account Balance: -€3.8B v +€4.3B prior.

- (GR) Greece Jan Current Account Balance: +€1.0B v -€3.6B prior.

Fixed income issuance

- None seen.

Looking ahead

- 06:00 (BE) Belgium Mar Consumer Confidence Index: No est v -4 prior.

- 06:00 (EU) Daily Euribor Fixing.

- 06:00 (FR) France Debt Agency (AFT) announcements on upcoming issuance ((bills).

- 06:25 (EU) Daily ECB Liquidity Stats.

- 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to leave Key 1-Week Auction Rate unchanged at 21.00%.

- 07:00 (UK) Mar CBI Industrial Trends Total Orders: -30e v -28 prior; Selling Prices: 20e v 19 prior.

- 07:00 (IE) Ireland Feb PPI M/M: No est v 0.1% prior; Y/Y: No est v 2.1% prior.

- 07:00 (UK) DMO to sell £6.0B in 1-month, 3-month and 6-month bills (£0.5B, £2.5B and £3.0B respectively).

- 07:30 (IN) India Forex Reserve w/e Mar 14th: No est v $654.0B prior.

- 07:30 (IN) India announces upcoming bill issuance (held on Wed).

- 08:00 (MX) Mexico Jan Gold Production: No est v 6.6K prior; Silver Production: No est v 356.7K prior; Copper Production: No est v 41.9K prior.

- 08:30 (CA) Canada Jan Retail Sales M/M: -0.4%e v 2.5% prior; Retail Sales (Ex Auto) M/M: -0.2%e v 2.7% prior.

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

- 09:05 (US) Fed’s Williams.

- 11:00 (EU) Euro Zone Mar Advance Consumer Confidence: -13.0e v -13.6 prior.

- 12:00 (EU) Potential sovereign ratings after European close (S&P on Ireland; Moody’s on Spain).

- 12:30 (US) Fed’s Goolsbee.

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 17:00 (CL) Chile Central Bank (BCCh) Interest Rate Decision: Expected to leave Overnight Rate Target unchanged at 5.00%.