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Bob Mason
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Economic Calendar:

Tuesday, 2nd March

German Retail Sales (MoM) (Jan)

German Unemployment Change (Feb)

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German Unemployment Rate (Feb)

Eurozone CPI (YoY) (Feb) Prelim

Wednesday, 3rd March

Spanish Services PMI (Feb)

Italian Services PMI (Feb)

French Services PMI (Feb) Final

German Services PMI (Feb) Final

Eurozone Markit Composite PMI (Feb) Final

Eurozone Services PMI (Feb) Final

Thursday, 4th March

German IHS Markit Construction PMI (Feb)

ECB Economic Bulletin

Eurozone Retail Sales (MoM) (Jan)

Eurozone Unemployment Rate (Jan)

Friday, 5th March

German Factory Orders (MoM) (Jan)

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The Majors

It was a bullish start to the week for the European majors on Monday.  The EuroStoxx600 rose by 1.80%, with the CAC40 and the DAX30 gaining 1.57% and 1.64% respectively.

Economic data from the Eurozone provided support to the European majors on the day.

The upside ultimately, however, came as a result of a calming across the bond markets at the start of the week.

COVID-19 vaccine news also supported demand for the European majors following last week’s pullback. Johnson & Johnson’s single dose vaccine delivery should bring a nearer end to containment measures.

Disappointing private sector PMI numbers out of China on the weekend and head of the European open on Monday failed to peg the majors back.

The Stats

It was a particularly busy day on the economic calendar on Monday, with manufacturing sector activity and inflation in focus.

Manufacturing PMIs

Spain’s manufacturing PMI rose from 49.3 to 52.9, with Italy’s manufacturing PMI increasing from 55.1 to a 37-month high 56.9. For Spain, it was the highest reading since Jul-2020.

Finalized numbers from France and Germany were also better than prelim figures.

The French manufacturing PMI rose from 51.6 to 56.1 in February, revised up from a prelim 55.0.

German manufacturing sector activity also came in better than initially expected. In February, the PMI rose from 57.1 to 37-month high 60.7, revised up from a prelim 60.6.

As a result of the pickup in member state manufacturing sector activity, the Eurozone’s manufacturing PMI increased from 54.8 to 57.9. This was up from a prelim 57.7/

According to the Eurozone’s finalized manufacturing Market Survey,

  • Operating conditions improved to the greatest degree for 3-years.
  • All 3 broad market groups recorded an improvement in operation conditions.
  • Investment goods producers registered the strongest growth (best since Jan-2018), followed by intermediate goods.
  • Consumer goods recorded relatively modest growth but the most marked since Sep-2020.
  • Manufacturing sector growth was broad-based, with the exception of Greece.
  • Germany and the Netherlands continued to sit at the top of the table, with export gains remaining particularly strong.
  • Austria recorded the best performance in 3-years, whilst France and Italy saw the most marked gains since the beginning of 2018.
  • Spain and Ireland recorded relatively modest growth, however.

Inflation

On the inflation front, Italian consumer prices rose by 0.1%, month-on-month, according to prelim February figures. In January, consumer prices had risen by 0.7%.

The annual rate of inflation, however, ticked up from 0.4% to 0.6% in February. Economists had forecast an annual rate of inflation of -0.1%

In Germany, consumer prices increased by 0.7%, month-on-month, following a 0.8% rise in January. Economists had forecast a 0.5% increase.

According to Destatis,

  • The annual rate of inflation accelerated from 1.0% to 1.3% in February, coming in ahead of a forecasted 1.2%.
  • Prices for services increased by 1.4%, year-on-year, while prices for goods increased by a more modest 1.0%.
  • Energy prices increased by 0.3% after having fallen by 2.3% in January, year-on-year.
  • Food prices rose by 1.4% softening from a 2.2% increase in January.

From the U.S

It was a relatively busy day, with the ISM Manufacturing PMI for February the key stats of the day. Finalized Market manufacturing PMI figures were also in focus though had a muted impact on the markets.

In February, the ISM Manufacturing PMI rose from 58.7 to 60.8 in February, coming in ahead of a forecasted 58.8.

  • The new orders index increased by 3.7 percentage points to 64.8%, with the production index rising from 60.7% to 63.2%.
  • Supporting new orders was a pickup in new export orders. The new export orders index increased by 2.3 percentage points to 57.2%.
  • Labor market conditions across the sector also improved, with the Employment Index rising by 1.8 percentage points to 54.4%.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Volkswagen rose by 1.54%, with BMW and Daimler seeing gains of 0.68% and 0.562% respectively. Continental saw red once more, however, falling by 0.63%.

It was a bullish day for the banks, however. Deutsche Bank rallied by 2.37%, with Commerzbank rising by 0.52%.

From the CAC, it was a mixed day for the banks. BNP Paribas fell by 0.28%, while Credit Agricole and Soc Gen gained 1.42% and 1.19% respectively.

It was also a bullish day for the French auto sector. Stellantis NV rallied by 3.52%, with Renault ended the day up by 1.37%.

Air France-KLM found even more support, rising by a further 0.90%, with Airbus SE rallying by 4.97%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Monday. Following a 3.25% fall from Friday, the VIX slid by 16.46% to end the day at 23.35.

A rebound across the U.S equity markets supported by a pullback in U.S Treasury yields supported the fall in the VIX on the day.

The NASDAQ and S&P500 rallied by 3.01% and by 2.38% respectively, with Dow rising by 1.95%.

The Day Ahead

It’s another busy day ahead on the European economic calendar. Key stats include German retail sales, unemployment, and prelim February inflation figures for the Eurozone.

Expect the stats to draw plenty of interest early in the European session.

From the U.S, there are no material stats to provide the majors with direction.

The lack of stats from the U.S will leave the European majors in the hands of chatter from Capitol Hill.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 38 points.

For a look at all of today’s economic events, check out our economic calendar.

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