Economic Indicators & Central Banks:
- Global stocks rallied on dovish signals from the ECB and FOMC, while focus turns to today’s NFP.
- Lagarde signalled rates are likely to remain unchanged in April but that in the central scenario there will likely be sufficient evidence to make a decision in June. The ECB President stressed that wage growth remains key for the inflation outlook.
- Germany: German producer price inflation lifted to -4.4% y/y from -5.1% y/y in the previous month. German industrial production rose 1.0% m/m in January. The weak trend mainly reflects the contraction at the end of last year, but while production stabilized in January, orders trends and indeed manufacturing surveys suggest ongoing weakness through the first quarter of the year. That leaves Germany at risk of a technical recession!
- NFP Preview: The February nonfarm payroll report is likely to reflect gyrations and give-back from the outsized January figures. We expect a 160k rise in jobs, about half of the 353k jump in January and the 333k pop in December. The workweek should tick up to 34.2 from the prior 34.1, while average hourly earnings should edge up 0.2% following the prior 0.6% jump. The unemployment rate is expected unchanged at 3.7%.
Market Trends:
- Wall Street soared with the S&P500 (US500) jumping 1.03% to a fresh record high at 5157. The NASDAQ (US100) surged 1.51% to 16,273.38, fractionally shy of Friday’s all-time peak of 16,274.94. The Dow (US30) rose 0.34%. In Europe, all of the bourses ended in the green.
- Asian shares mostly saw gains, following the trend set by US stocks, which reached record highs. The Nikkei(JPN225) increased by 0.2%, Sydney’s S&P/ASX 200 surged by 1.1%, South Korea’s Kospi jumped by 1.1%, Hong Kong’s Hang Seng rose by 1.3%, and the Shanghai Composite gained 0.5%.
Financial Markets Performance:
- The USDIndex extended its losses and dropped to 102.67, the first close under 103 since January 15 as Treasury yields eased in the bond market after a couple reports gave potential signals of lessened pressure on inflation.
- The Yen extended advance as expectations grew for the BOJ to raise interest rates for the first time since 2007.
- EUR and GBP broke 1-month highs and multi-month channels against the Dollar respectively. EURUSD breached 1.0950 and GBPUSD is above 1.28.
- Gold held at 2160 territory, with COT reports indicating consolidation in the near future.
- Bitcoin maintained above $67,400.
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Andria Pichidi
Market Analyst
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