US crypto reserve confirmed by Trump

EU mid-market update: Money floods into European defense names as US-Ukraine relationship sours and EU reinforces commitment at London Summit; US Crypto Reserve confirmed by Trump.

Notes/observations

- Markets started the week with cautious optimism following the weekend’s geopolitical developments. Asian stocks were led by a recovery theme, with Indonesia’s stocks surging 3.5% - its biggest one-day gain in four years. Eurostoxx and DAX also followed suit at open, mirroring the positive momentum. Cryptos saw a dramatic recovery, with Bitcoin rising 10% following Trump’s executive order on digital assets. However, attention quickly turned to trade developments as US tariffs on Canada and Mexico are set to go into effect on Tuesday, fueling uncertainty. The Euro and equities were marginally bid against the USD early in the European session, though risk sentiment remains fragile.

- Despite strong start, European indices failed to hold onto all of early gains as defense stocks outperformed, notably Rheinmetall, surging over 17% amid increasing defense spending commitments in Europe.

- In Ukraine, tensions remain high after Ukrainian President Zelenskiy left the White House without finalizing an expected minerals deal, raising further questions about the future of the US-Ukraine economic partnership. UK PM Starmer announced plans for a coalition to deploy peacekeeping troops if a ceasefire agreement is achieved. Markets is focusing on the fluid political situation, with no immediate resolution in sight. The French President's call for a one-month truce has further complicated the outlook. President Zelenskiy clarified that he did not apologize for his handling of the Oval Office meeting but noted that such discussions should not be entirely open, as they did not yield any positive outcomes for Ukraine. He expressed willingness to return to the White House if invited for serious talks.

- On the data front, European manufacturing PMIs signaling a mild easing of contraction, notably in Germany and France. However, Spain reported its first contraction in over a year.

- Attention shifts to the US session, with the Feb ISM Manufacturing PMI at 09:45 ET. The ECB’s policy decision later this week looms large, with a fifth straight rate cut expected. Tuesday’s US tariffs on Canada, Mexico, and China remain the wildcard—markets brace for ripple effects on growth and energy demand (Brent crude down to $72.5/bbl).

- Asia closed mixed with Nikkei outperforming +1.8%. EU indices +0.3-1.1%. US futures +0.2-0.5%. Gold +0.3%, DXY -0.5%; Commodity: Brent -0.4%, WTI -0.5%; Crypto: BTC +6.6%, ETH +4.3%.

Asia

- China Feb Manufacturing PMI data (Govt Official) 50.2 v 49.9e [moved back into expansion].

- China Feb Caixin PMI Manufacturing 50.8 v 50.4e (5th month of expansion).

- Japan Feb Final Manufacturing PMI: 49.0 v 48.9 prelim (confirmed 8th straight contraction).

- Australia Feb Final Manufacturing PMI: 50.4 v 50.6 prelim (confirmed 2nd month of expansion.

- China said to be evaluating countermeasures in response to the March 4th tariff threat from the United States.

Global conflict/tensions

- Ukraine Pres Zelenskyy said to have rejected calls for Ukraine to agree an immediate ceasefire in its war with Russia, Ukraine needed the United States to guarantee peace.

- EU's Von der Leyen and German's Scholz expressed support for Zelenskiy and Ukraine (following Zelenskiy's confrontational White House meeting on Fri).

- Russia's Pres Putin said to have offered potential rare-earth minerals deal to US following breakdown of Trump-Zelenskiy talks at White House last Friday.

Europe

- S&P affirmed France sovereign rating at AA-; Outlook revised to Negative from Stable.

- SNB Chairman Schlegel: Reiterates stance that SNB will only reintroduce negative interest rates if necessary.

- Germany said to be considering special funds for defense and infrastructure for parties in talks to form govt (**Reminder: Germany's conservatives and Social Democrats began exploratory talks on Friday, Feb 28th).

Americas

- US Commerce Sec Lutnick commented that would be tariffs on Canada and Mexico on Tuesday, March 4th, but Pres Trump would determine at what levels; China tariffs were set unless they end fentanyl trafficking into the US.

- House Speaker Johnson said to want clear CR through FY through Sept 2025. Wants to pass a clean government funding extension to avoid a shutdown through September and then work toward incorporating cuts devised by Elon Musk’s Department of Government Efficiency initiative in legislation for fiscal year2026.

- President Trump announced the names of 5 digital assets he expected to be included in a new US crypto strategic reserve [including bitcoin, ether, XRP, SOL (Solana) and ADA (cardano)].

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.34% at 559.08, FTSE +0.28% at 8,834.78, DAX +1.07% at 22,734.94, CAC-40 +0.35% at 8,139.89, IBEX-35 -0.31% at 13,281.34, FTSE MIB +0.21% at 38,738.00, SMI +0.31% at 13,049.40, S&P 500 Futures +0.30%].

Market focal points/key themes: European indices open mixed with a modest positive bias that was maintained through the early part of the session; better performing sectors include industrials and energy; among lagging sectors are real estate and consumer discretionary; ING ups stake in Van Lanschot; no major earnings expected in the upcoming Americas session.

Equities

- Consumer discretionary: Bunzl [BNZL.UK] -6.5% (FY24 results).

- Energy: Uniper [UN01.DE] -0.5% (reportedly Russia has been engineering a restart of Russia’s Nord Stream 2 gas pipeline to Europe with the backing of US investors, including post-sanctions deal with Gazprom), Shell [SHEL.UK] +1.0% (said to be examining sale of chemical assets in the US and Europe).

- Industrials: Rheinmetall [RHM.DE] +11.0%, Rolls-Royce [RR.UK] +6%, Hensoldt [HAGG.DE] +18.0%, ThyssenKrupp [TKA.DE] +10.5%, Thales [HO.FR] +14.0%, Leonardo [LDO.IT] +10.5%, Saab [SAABB.SE] +8.5% (defense names soaring on back of expected increase in EU member defense funding following fallout of Trump/Zelenskiy meeting and Ukraine summit in London), Airbus [AIR.FR] +2.0% (positive sentiment on Feb deliveries), Senior [SNR.UK] -2.5% (FY24 results) - Technology: STMicroelectronics [STM.FR] -2.0% (Intel said to delay Ohio chip plant until 2030 or 2031; Nvidia's CoWoS orders at TSMC for 2025 showing no significant changes since Q4 2024).

- Telecom: Spirent Communications [SPT.UK] +2.5% (VIAVI to acquire Spirent Communications plc's High-Speed Ethernet and Network Security Testing unit from Keysight Technologies for $410M).

Speakers

- Sweden Central Bank (Riksbank) Business Survey noted that there were no strong winds in the economic sails.

- Japan Top FX Diplomat Mimura noted that the currency trend was a concern for real wages; Hearing from all firms about strong prospects of wage increases. Weaker JPY (yen) was a matter of inflation for Japan via higher import costs.

Currencies/fixed income

- USD began the week on a slightly soft tone but staying within recently established ranges. Focus remain on the trade front and geopolitical factors.

- EUR/USD moved above the 1.04 level aided by upward revisions in various PMI Manufacturing readings. The Feb Advamce CPI reading for the Euro Zone remained above the ECB target for the 4th straight month. ECB to meet later this week and almost certainly lower interest rates again. However, some recent ECB speak has highlighted resistance to additional monetary easing afterwards.

- USD/JPY staying above the 150 level. Japan Top FX Diplomat Mimura noted that the currency trend was a concern for real wages.

- The US 10-year Treasury yield higher by almost 5bps at 4.34%; 10-year German Bund yield at 2.44% and 10-year Gilt yield at 4.50%.

Economic data

- (NL) Netherlands Jan Retail Sales Y/Y: 3.8% v 1.5% prior.

- (NL) Netherlands Feb Preliminary CPI Y/Y: 3.8% v 3.3% prior.

- (NL) Netherlands Feb Preliminary CPI EU Harmonized M/M: +1.4 v -0.7% prior; Y/Y: 3.5% v 3.2%e.

- (NL) Netherlands Feb Manufacturing PMI: 50.0 v 48.4 prior (1st non-contraction in 8 months).

- (RU) Russia Feb Manufacturing PMI: 50.2 v 53.1 prior (5th month of expansion).

- (TR) Turkey Feb CPI M/M: 2.3% v 2.9%e; Y/Y: 39.1% v 39.9%e; CPI Core Y/Y: 40.2% v 41.1%e.

- (TR) Turkey Feb PPI M/M: 2.1% v 3.1% prior; Y/Y: 25.2% v 27.2% prior.

- (TR) Turkey Feb Manufacturing PMI: 48.3 v 48.0 prior (11th month of contraction).

- (SE) Sweden Feb PMI Manufacturing: 53.5 v 53.1 prior (7th month of expansion).

- (HU) Hungary Jan Preliminary Trade Balance: €0.9B v €0.5B prior.

- (TH) Thailand Feb Business Sentiment Index: 48.9 v 48.5 prior.

- (AT) Austria Feb Preliminary CPI M/M: 0.6% v 1.0% prior; Y/Y:3.3% v 3.2% prior.

- (HU) Hungary Feb Manufacturing PMI: 51.0 v 50.1e (3rd straight expansion).

- (PL) Poland Feb Manufacturing PMI: 50.6 v 49.1e (1st expansion in 34 months).

- (ES) Spain Feb Manufacturing PMI: 49.7 v 51.4e (1st contraction in 13 months).

- (CH) Swiss Feb PMI Manufacturing: 49.6 v 48.2e (26th month of contraction); PMI Services: 56.8 v 57.2 prior.

- (CZ) Czech Feb Manufacturing PMI: 47.7 v 47.1e (33rd month of contraction).

- (HK) Hong Kong Jan Retail Sales Volume Y/Y: -5.2% v -8.2%e; Retail Sales Value Y/Y: -3.2% v -3.2%e.

- (NG) Nigeria Feb Manufacturing PMI: 53.7 v 52.0 prior.

- (IT) Italy Feb Manufacturing PMI: 47.4 v 46.7e (11th month of contraction).

- (FR) France Feb Final Manufacturing PMI: 45.8 v 45.5 prelim (confirmed 25th month of contraction).

- (DE) Germany Feb Final Manufacturing PMI: 46.5 v 46.1 prelim (confirmed 32nd month of contraction).

- (EU) Euro Zone Feb Final Manufacturing PMI: 47.6 v 47.3 prelim (confirmed 32nd month of contraction).

- (NO) Norway Feb Manufacturing: 51.9 v 51.3 prior (8th month of expansion).

- (ZA) South Africa Feb Manufacturing PMI: 44.7 v 45.0e (4th month of contraction).

- (CH) Swiss weekly Total Sight Deposits (CHF): 437,4B v 438.1B prior; Domestic Sight Deposits: 429.4B v 430.2B prior.

- (IT) Italy 2024 Annual GDP Y/Y: 0.7% v 0.4%e; Budget Deficit to GDP Ratio: 3.4% v 7.2% prior.

- (UK) Feb Final Manufacturing PMI: 46.9 v 46.4 prelim (confirmed 5th month of contraction).

- (UK) Jan Net Consumer Credit: £1.7B v £1.2Be; Net Lending: £4.2B v £3.5Be.

- (UK) Jan Mortgage Approvals: 66.2K v 65.5Ke.

- (UK) Jan Money Supply M4 M/M: 1.3% v 0.1% prior; Y/Y: 4.1% v 2.6% prior; M4 (ex-IOFCs) 3-month Annualized: 5.1% v 4.1% prior.

- (EU) Euro Zone Feb Advance CPI Estimate Y/Y: 2.4% v 2.3%e; CPI Core Y/Y: 2.6% v 2.5%e.

Fixed income issuance

- None seen.

Looking ahead

- (IT) Italy Feb Budget Balance: No est v -€5.4B prior.

- (US) Feb Total Vehicle Sales: No est v 15.6M prior.

- (RO) Romania Feb International Reserves: No est v 69.8B prior.

- (ZA) South Africa Feb Naamsa Vehicle Sales Y/Y: No est v 10.4% prior.

- (CO) Colombia Q4 Current Account Balance: -$2.0Be v -$1.7B prior.

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

- 05:30 (DE) Germany to sell €2.0B of 6-month bubills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.5-3.5B in 3-month and 6-month bills.

- 06:00 (PT) Portugal Jan Retail Sales M/M: No est v 2.4% prior; Y/Y: No est v 5.5% prior.

- 06:00 (PT) Portugal Jan Industrial Production M/M: No est v -4.2% prior; Y/Y: No est v -4.9% prior.

- 06:00 (DE) German Bundesbank on Debt brake reform.

- 06:00 (IL) Israel to sell bonds.

- 06:00 (NO) Norway announcement on upcoming bond issuance (held on Wed).

- 06:30 (CL) Chile Jan Economic Activity Index (Monthly GDP) M/M: 0.2%e v 0.9% prior; Y/Y: 2.5%e v 6.6% prior.

- 08:00 (CZ) Czech Feb Budget Balance (CZK): No est v -11.2B prior.

- 08:00 (SG) Singapore Feb Purchasing Managers Index (PMI): No est v 50.9 prior; Electronics Sector Index: No est v 51.1 prior.

- 08:00 (BR) Brazil Feb Manufacturing PMI: No est v 50.7 prior.

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

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (ES) Spain Debt Agency (Tesoro) sixe announcement on upcoming issuance.

- 09:00 (FR) France Debt Agency (AFT) to sell €6.1-7.7B in 3-month, 6-month and 12-month bills.

- 09:30 (CA) Canada Feb Manufacturing PMI: No est v 51.6 prior.

- 09:45 (US) Feb Final S&P Manufacturing PMI: 51.6e v 51.6 prelim.

- 10:00 (US) Feb ISM Manufacturing: 50.8e v 50.9 prior.

- 10:00 (US) Jan Construction Spending M/M: -0.1%e v +0.5% prior.

- 10:00 (MX) Mexico Feb Manufacturing PMI: No est v 49.1 prior.

- 10:00 (MX) Mexico Central Bank (Banxico) Economist Survey.

- 10:00 (MX) Mexico Jan Total Remittances: $4.7Be v $5.2B prior.

- 10:00 (CO) Colombia Feb PMI Manufacturing: No est v 53.8 prior.

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

- 12:00 (IT) Italy Feb New Car Registrations Y/Y: No est v -56.9% prior.

- 12:30 (US) Fed's Musalem keynote speech.

- 13:00 (MX) Mexico Feb IMEF Manufacturing Index : No est v 45.6 prior; Non-Manufacturing Index: No est v 49.1 prior.

- 16:45 (NZ) New Zealand Jan Building Permits M/M: No est v -5.6% prior.

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 89.8 prior.

- 18:00 (KR) South Korea Jan Industrial Production M/M: -3.1%e v +4.6% prior; Y/Y: -2.0%e v +5.3% prior; Cyclical Leading Index Change: No est v -0.2 prior.

- 18:30 (JP) Japan Jan Jobless Rate: 2.4%e v 2.4% prior; Job-To-Applicant Ratio: 1.25e v 1.25 prior.

- 18:50 (JP) Japan Q4 Capital Spending (Capex) Y/Y: 5.0%e v 8.1% prior; Capital Spending (ex-software) Y/Y: 4.7%e v 9.5% prior; Company Sales Y/Y: 3.0%e v 2.6% prior; Company Profits Y/Y: +0.3%e v -3.3% prior.

- 18:50 (JP) Japan Feb Monetary Base Y/Y: No est v -2.5% prior.

- 19:01 (UK) Feb BRC Shop Price Index Y/Y: No est v -0.7% prior.

- 19:30 (AU) Australia RBA Feb Minutes.

- 19:30 (AU) Australia Jan Retail Sales M/M: +0.3%e v -0.1% prior.

- 19:30 (AU) Australia Q4 Current Account (A$): No est v -14.1B prior; Net Exports of GDP: No est v 0.1 prior.

- 19:30 (KR) South Korea Feb PMI Manufacturing: No est v 50.3 prior.

- 22:35 (JP) Japan to sell 10-year JGB Bonds.