U.S. Markets:

• On Friday, Wall Street indices closed with declines, led by a drop in technology stocks, as mixed signals emerged from the US labor market data for February. On a daily basis, the Nasdaq composite index (CCO:USN) lost 1.16% to 16,085.11, the NYSE composite index (NYA:USY) down 0.21% to 17,889.62, the S&P 500 index (SPX:USY) lost 0.65% to close at 5,123.69, and the Dow Jones Industrial Average index (DJI:DJ) lost 0.18% to 38,722.69.
• The Dollar Index (DXY), a closely watched gauge of the U.S. dollar’s performance against other major currencies, closed last week at 102.7 marking a 1.1% weekly decrease.
• The Brent crude oil (LCO07:USC) closed the previous week at USD 82.1 per barrel, reflecting a weekly 1.8% drop.
• The price of gold (XAU/USD:USC) closed last week with a 4.5% increase, settling at USD 2,177,50 per ounce.
• The 10-year U.S. Treasury yield (USGG10YR:BND) completed the week with a 10 basis points decrease, settling at 4.07%. The 2-year U.S. Treasury yield (USGG2YR:BND), particularly responsive to Federal Reserve policy rates, finished at 4.48% down by 5 basis points.

European Markets:

• European stocks finished mostly up Friday, as the Stoxx Europe 600 index (SXXP:FR) gained 0.02% to 503.26. The German DAX index (DAX:DEF) decreased 0.16% to 17,814.51, and the French CAC 40 index(PX1:FR) added 0.15% to 8,028.01.

Asian Markets:

• Stocks in the Asia-Pacific region mostly grew on Friday, March 08. Hong Kong stocks rose with the Hang Seng index (HSI:HK) up 0.76% at 16,353.39, while the Nikkei 225 index (100000018:JPT) gained 0.2% to 39,688.94 and China’s Shanghai Composite index (000001:CNA) rose 0.6% to 3,046.02.
• The S&P/ASX 200 Benchmark index (XJO:AU) in the Australian stock market rose 1.0% to 7,847.00.

Let’s take a look at the macroeconomic indicators and developments tracked in the US last week:

• Service Sector PMIs

In February, the service sector Purchasing Managers’ Index (PMI) in the United States was revised upward from 51.3 to 52.3, indicating a slight acceleration in growth. Despite this, the growth trend in the service sector has been sustained in the growth zone for the past 13 months.

The ISM Services PMI for February declined from 53.4 to 52.6, surpassing expectations and signaling a slight slowdown in growth in non-manufacturing sectors.

• Factory Orders

Factory orders registered a higher-than-expected decrease of 3.6% in January, following a 0.3% decline in December, marking the most significant drop since April 2020, extending the decline into the second month. In the largest decline since April 2020, orders decreased for transportation equipment (-16.2%), primary metals (-1.9%), fabricated metal products (-0.9%), and machinery (-0.3%). However, there was an increase in orders for computers and electronic products by 1.3%, and electrical equipment, appliances, and components saw a rise of 0.9%.

When excluding transportation, factory orders experienced a 0.8% monthly decrease.

• Employment Market Data

Weekly new jobless claims for the week ending March 2 in the U.S., despite expectations of a slight increase, remained at the level of 217,000, similar to the previous week. The figures continue to stay below historical averages, indicating a tight labor market.

• Trade Balance and Foreign Trade

In January, the U.S. trade deficit exceeded expectations, rising from $64.2 billion to $67.4 billion, marking the highest level in the last nine months. Monthly imports increased by 1.1% to $324.6 billion, while exports saw a marginal increase of 0.1% to $257.2 billion.

• ADP Private Sector Employment and Job Openings

The ADP private sector employment increase for February rose from 111,000 to 140,000, falling below expectations of a 150,000 increase. Additionally, the previous month’s data was slightly revised upward from 107,000 to 111,000.

• Job Openings and Labor Turnover Survey (JOLTS)

The JOLTS data for job openings in January in the U.S. declined slightly from 8.89 million to 8.86 million, indicating a modest slowdown in firms’ demand for labor, reaching the lowest level in the last three months.

• Labor Market Dynamics

In February, the non-farm payrolls increase exceeded expectations, rising from 229,000 to 275,000, surpassing the anticipated 200,000 level. However, the previous month’s reading, initially reported at a robust 353,000, was sharply revised downward to 229,000, marking the lowest level in the past year.Top of Form

Contrary to expectations of a steady rate at 3.7%, the unemployment rate in February rose to 3.9%, reaching the highest level since January of the previous year. The labor force participation rate remained steady at 62.5%, similar to the previous month.

The monthly growth rate of average hourly earnings slowed from 0.5% to 0.1% in February, hitting the lowest level since February 2022. Expectations were for a slowdown to 0.3%. On a yearly basis, the growth rate declined from 4.4% to 4.3%.

• Consumer Price Index (CPI)

The focus in the United States will be on the release of the Consumer Price Index (CPI) for February on Tuesday. In January, the headline CPI exceeded expectations, accelerating from 0.2% to 0.3% on a monthly basis, marking the highest increase in the last four months. Year-on-year, it declined from 3.4% to 3.1%, slightly below the anticipated decrease to 2.9%.

Looking ahead to February, the headline CPI is anticipated to show a monthly increase from 0.3% to 0.4%, with a year-on-year rate of 3.1%, mirroring the previous month.

The core CPI is expected to experience a slight slowdown in the monthly growth rate from 0.4% to 0.3%, resulting in a year-on-year decrease from 3.9% to 3.7%.

• Producer Price Index (PPI)

On Thursday, attention will turn to the Producer Price Index (PPI) for February. In January, the headline PPI showed a robust increase of 0.3% month-on-month, surpassing expectations. Year-on-year, it moderately decreased from 1% to 0.9%, slightly below the expected decline to 0.6%.

As for February, the PPI is predicted to maintain a monthly growth rate of 0.3%, while the year-on-year figure is anticipated to rise from 0.9% to 1.2%.

The core PPI is expected to exhibit a monthly slowdown from 0.5% to 0.2%, with a slight year-on-year decrease from 2% to 1.9%.

• Retail Sales

Thursday will also bring the release of retail sales data for February. Expectations suggest a rebound, with a projected 0.8% increase in monthly retail sales and a 0.4% increase in core retail sales.

• Weekly Unemployment Claims

Thursday’s employment market data will include the weekly initial jobless claims. Despite expectations of a slight increase, the previous week saw claims remain at a low level of 217,000, signaling continued tightness in the labor market.

• Industrial Production and Capacity Utilization

Friday will feature data on industrial production and capacity utilization for February. In January, industrial production showed a marginal decline of 0.1% month-on-month, following a flat trend in December. Capacity utilization maintained a consistent level at 78.5%, mirroring the figures from the preceding month.

Looking ahead to February, forecasts indicate that industrial production is likely to remain flat (0%) on a monthly basis. Similarly, the capacity utilization rate is expected to hold steady at 78.4%, resembling the levels observed in the previous month (78.5%).

• New York Fed Empire State Manufacturing Index

On Friday, the New York Fed Empire State Manufacturing Index for March will be released, offering signals about the direction of the manufacturing industry.

The New York Fed Empire State Manufacturing Index, after reaching its lowest level since May 2020 at -43.7 in January, rebounded more than expected in February to -2.4. This recovery was attributed to a slowdown in the decline of new orders and an increase in shipments. The index is anticipated to experience a partial decline in March, reaching a level of -7.5.

• University of Michigan Consumer Sentiment Index

Additionally, Friday will see the preliminary release of the University of Michigan Consumer Sentiment Index for March. The index is expected to show a slight decrease from the downwardly revised 76.9 to 76.6, providing insights into consumer confidence and expectations.

• HCOB Service Sector PMI

The final Purchasing Managers’ Index (PMI) data for the service sector in Europe in February, excluding the UK and the Eurozone, continued to indicate contraction below the threshold level of 50.

• Producer Price Index (PPI) and Investor Confidence in the Eurozone

In the Eurozone, the Producer Price Index (PPI) recorded a third consecutive monthly decrease of 0.9% in January, surpassing expectations. This marked the sharpest decline since May 2023.

On an annual basis, the rate of decline slowed from 10.7% to 8.6%, maintaining a downward trend for the past nine months. The decline in PPI in January was notably influenced by a significant drop in energy product prices (0.9% decrease).

Investor confidence data for March in the Eurozone, as measured by the Sentix index, rose from -12.9 to -10.5, maintaining its trend at the highest levels since April and continuing an upward trajectory for the fifth consecutive month. Despite the positive movement, the sentiment remained weak in the negative zone. The current conditions index improved from -20 to -18.5 for the fifth consecutive month, while the expectations index, reflecting investor assessments for the next six months, increased from -5.5 to -2.3, indicating the sixth month of recovery.

• ECB’s Monetary Policy Decision

In the Eurozone, attention was focused on the European Central Bank’s (ECB) interest rate decision and President Lagarde’s speech. The ECB, in line with expectations, kept interest rates unchanged for the fourth consecutive meeting. It emphasized that the current level of interest rates would significantly contribute to achieving the 2% inflation target and would remain sufficiently restrictive for the necessary duration.

Consequently, the ECB maintained the key refinancing rate at 4.50%, the marginal lending rate at 4.75%, and the deposit facility rate at 4.00%.

• Inflation and Growth Forecasts for the Eurozone

Inflation forecasts for the Eurozone were adjusted for 2024, with the headline inflation estimate lowered from 2.7% to 2.3%, and the 2025 forecast reduced from 2.1% to 2.0%. The 2026 inflation forecast remained at 1.9%. Core inflation estimates were revised downward for 2024 (from 2.7% to 2.6%), 2025 (from 2.3% to 2.1%), and 2026 (from 2.1% to 2.0%).

The ECB is anticipated to achieve the 2% inflation target in headline inflation in 2025 and core inflation in 2026.

Growth forecasts for the Eurozone were downwardly revised for 2024 (from 0.8% to 0.6%), while the 2025 estimate remained at 1.5%. The 2026 growth forecast was slightly revised upward from 1.5% to 1.6%.

• Eurozone Economic Performance

In the fourth quarter, the Eurozone economy remained stagnant, showing growth of 0%, consistent with revised data. The overall growth projection for the Eurozone in 2023 was downwardly revised from a modest 0.5% to a restrained 0.4%.

• Retail Sales in the Eurozone

Retail sales in the Eurozone, after experiencing a monthly decline of 0.6% in December, showed a partial recovery in January with a modest increase of 0.1%, in line with expectations. However, on a yearly basis, the rate of decline increased from 0.5% to 1%, marking the sixteenth consecutive month of contraction. Consumer demand in the region continued to remain weak due to increasing borrowing costs.

• Manufacturing Trends in Germany – Factory Orders, Industrial Production and Trade Data

In Germany, factory orders, recorded a significant decline of 11.3% month-on-month, following a 12% increase in December. This decrease exceeded expectations (projected at a 6% decrease) and marked the sharpest drop in the last six months. On a yearly basis, factory orders in Germany showed a 6% decrease in January, following a 6.6% increase in December.

Germany witnessed a partial rebound in industrial production in January, recording a 1% increase month-on-month, following a 2% decline in December. This exceeded expectations (0.6% increase) and marked the first monthly rise since April 2023. However, on an annual basis, the contraction rate escalated from 3.5% to 5.5%.

In terms of trade data, German exports in January showed a substantial rise of 6.3%, exceeding expectations, following a 4.5% decline in December. This increase brought the total to 135.6 billion Euros, reaching the highest level in the last 11 months. On the other hand, monthly imports in Germany increased by 3.6%, surpassing expectations, after a 6.7% decline in December, reaching 108 billion Euros.

Key inflation data that will guide the European Central Bank’s monetary policy decisions will be released on Tuesday. The final Consumer Price Index (CPI) data for February in Germany will be also closely monitored.

On Wednesday, attention will shift to industrial production data for January in the Eurozone. After a 0.4% monthly increase in November, there was an unexpected 2.6% surge in December, representing the most significant rise since August 2022.

Furthermore, on Wednesday, the United Kingdom will release monthly GDP growth as well as goods trade balance, industrial production data for January, providing insights into the economic performance at the beginning of the year.

• China – Caixin Services PMI and Foreign Trade Data

The Caixin China General Service PMI in February, signaling the trajectory of small and medium-sized enterprises, declined from 52.7 to 52.5. This decrease suggests a slight slowdown in service sector growth, marking the slowest expansion since November. However, the service sector activities continued to grow for the 14th consecutive month.

In terms of foreign trade data for February in China, the total exports for January-February of this year saw a significant increase of 7.1% compared to the same period last year, beating expectations (projected at a 1.9% increase). Similarly, imports recorded a growth of 3.5%, exceeding expectations (projected at a 1.5% increase). These figures indicate signs of recovery in both global and domestic economic activities.

• Taiwan’s Exports

Exports from Taiwan increased by 1.3% year-on-year, reaching $31.43 billion in February 2024. While this growth beat market expectations of a 1.1% increase, it represented a significant slowdown from January’s nearly two-year high of 18.1%.

• South Korea’s Current Account Surplus

South Korea reported a current account surplus of $3.05 billion in January 2024, down from the previous month’s surplus of $7.41 billion.

In Q4 2023, Japan’s GDP showed a growth of 0.1% quarter-on-quarter, contrary to the initial estimate of a 0.1% decline and the Q3 contraction of 0.8%. The economy narrowly avoided a recession, as market expectations were for a 0.3% increase. This positive outcome was supported by a significant upward revision in capital expenditure, recording a 2.0% growth compared to the preliminary data and the Q3 figure, which had seen a 0.1% decline.

In February 2024, China’s consumer prices rose by 0.7% year-on-year, surpassing market expectations of 0.3%. This marks a significant turnaround from the previous month’s sharpest drop in over 14 years, which was a decrease of 0.8% in January. On a monthly basis, consumer prices increased by 1.0%, making it the third consecutive month of rise and reaching the highest level since January 2021.

On Tuesday, attention will be on the announcement of the People’s Bank of China’s one-year medium-term lending facility rate, with growing anticipation of a potential rate cut. The impact of the Lunar New Year holidays on new yuan loans and monetary indicators is expected to result in a slowdown in loan growth compared to the record levels observed in January.

On Friday, China’s house price index remains a key indicator to monitor.

Foreign trade figures from the Philippines, India and Indonesia will also be released, and in Australia, close attention will be given to the NAB business confidence index as an indicator of business sentiment in the country.