Major European Service PMIs miss expectations in various readings

Notes/Observations

- India's RBI again cuts Key Rate by 25bps in an intra-meeting move seen as a sign of approval for PM Modi's first full-year budget (was presented over the weekend)

- Australia Q4 GDP comes in roughly in line helping to steady the Aussy

- Major European Service PMIs miss expectations in various readings (Spain, Italy, Germany, Euro Zone and UK all miss)

- Euro Zone Jan Retail Sales handily beats expectations (MoM: 1.1% vs. 0.2%e)

Economic data

- (IN) India Feb Services PMI: 53.9 v 52.4 prior; Composite PMI: 53.5 v 53.3 prior

- (RU) Russia Feb Services PMI: 41.3 v 42.5e (5th month of contraction); Composite PMI: 44.7 v 45.6 prior

- (IE) Ireland Feb Services PMI: 61.4 v 62.5 prior (31st month of expansion but lowest since July); Composite PMI: 60.7 v 60.6 prior

- (ZA) South Africa Feb Services PMI: 50.0 v 50.0e (moves out of contraction)

- (SE) Sweden PMI Services: 56.7 v 57.4e

- (TW) Taiwan Jan Industrial Production Y/Y: 8.1% v 8.2%e; Commercial Sales Y/Y: -0.6% v +3.2%e

- (ES) Spain Feb Services PMI (miss): 56.2 v 56.6e (16th month of expansion); Composite PMI: 56.0 v 56.6e

- (IT) Italy Feb Services PMI (miss): 50.0 v 51.4e; Composite PMI: 51.0 v 51.4e

- (FR) France Feb Final Services PMI (inline): 53.4 v 53.4e (confirmed moves back into expansion and highest since Aug 2011); Composite PMI: 52.2 v 52.1e

- (DE) Germany Feb Final Services PMI (miss): 54.7 v 55.5e (confirmed 21st straight month of growth); Composite PMI: 53.8 v 54.3e

- (EU) Euro Zone Feb Final Services PMI: 53.7 v 53.9e (confirmed 19th straight month of growth); Composite PMI: 53.3 v 53.5e

- (UK) Feb Services PMI (miss): 56.7 v 57.5e (26th straight month of expansion); Composite PMI: 56.7 v 56.7 prior

- (EU) Euro Zone Jan Retail Sales (beat) M/M: 1.1% v 0.2%e; Y/Y: 3.7% v 2.3%e

Fixed Income:

- (IN) India sold total INR140B in 3-month and 12-month Bills (INR80B and INR60B respectively)

- (EU) ECB allotted $0.0M in 7-day USD Liquidity Tender at dixed 0.62% vs. $0.0M prior

- (SE) Sweden sold total SEK17.5B vs. SEK17.5B indicated in 3-month and 6-month Bills

- (GR) Greece Debt Agency (PDMA) sold €1.13B vs. €875M indicated in 26-Week Bills; Avg Yield: 2.97% v 2.75% prior; Bid-to-cover: 1.3x v 1.30x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 +0.1%, FTSE 100 -0.2% at 6,878, DAX -0.2% at 11,256, CAC-40 +0.2% at 4,877, IBEX-35 -0.5% at 10,965, FTSE MIB +0.2% at 22,022, SMI +0.3% at 8,983, Athens Stock Exchange -2%, S&P 500 Futures -0.3% at 2,099]

- Market Focal Points/Key Themes: Equity markets open slightly higher following Tuesday's losses, with Thursday's ECB meeting and Friday's US payrolls in focus; Henkel declines after reporting Q4 results, Lower profits weigh on gold and silver miner Fresnillo, ITV supported by special dividend, Axel Springer misses ests, Glencore weighed down by share placement, Standard Chartered rises amid earnings report and cost cuts (does not disclose rights offering); Euro zone services PMI data generally below ests; Greek equities decline by over 1.5%; Upcoming US ADP employment data

By Sector

- Financials [Standard Chartered STAN.UK +6% (maintained dividend) ]

- Industrials [Henkel HEN3.DE -3% (cautious outlook) ]

- Consumer Discretionary [ITV ITV.UK +4% (special dividend); Axel Springer SPR.DE -4.5% (FY results below ests)

- Basic Materials/Resources [Fresnillo FRES.UK -3.5% (FY profits declined), Glencore GLEN.UK -1.5% (share placement) ]

- Utilities [Abertis ABE.ES -4% (share placement)

- Stoxx50 Sectors [Consumer Cyclical -0.5%, Basic Materials -0.5%, Technology -0.4%, Financials -0.3%, Consumer Non-Cyclical -0.2%, Industrials -0.1%, Utilities -0.1%; Energy +0.3%, Telecom +0.1%]

**Speakers**

- EU's Juncker stated that Greece's PM Tsipras would not keep many of his election promises as Greek elections did not change EU treaties

- South Africa Central Bank (SARB) Deputy Gov Groepe reiterated the Board view that bar for further accommodation is high

- India Central Bank (RBI) Gov Rajan post rate decision press conference noted that its liquidity stance was 'fairly accommodative' anf had no doubt pressure of the two rate cuts would feed into lower lending rates by banks.RBI was not going for a competitive devaluation of the INR currency (Rupee). Could act against temporary undesirable volatility in INR currency (Rupee) but not if it is a sustained trend

Currencies

- The USD continued to maintain a firm tone against most currencies with the USD Index hitting fresh 11-year highs. Some dealers noted that the USD Index was approaching the 50% retracement level of its global crisis moves from its 2001 highs to the 2008 lows around the 95.85 area - The lower revisions in numerous European PMI Services added to the Euro downward pressures. With the EUR/USD probing the lower end of the 1.11 neighborhood. Better Euro Zone retail sales data help to avoid a Euro rout from worsening.

Political/In the Papers:

- (GR) ECB's Draghi sends letters responding to questions from Greek, Spanish and Italian members of European Parliament about the impending QE program

- (GR) Greece Govt has called for all executives in the main banks to resign ahead of implementing changes to planning to their governing boards

- (CN) PBoC Dep Gov Yi Gang (also head of FX regulator SAFE): PBoC is studying deflation risks in China - Chinese press

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)

- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to cut Base Rate by 25bps to 1.75% (no set time)

- (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to raise Selic Target Rate by 50bps to 12.75% (no set time)

- 05:30 (SR) Saudi Oil Min Al-Nami speech in Berlin

- 06:00 (IE) Ireland Feb Live Registry Monthly Change: No est v -3.6K prior; Unemployment Rate: No est v 10.5% prior

- 06:00 (CZ) Czech Republic to sell Bonds

- 06:45 (EU) German Chancellor Merkel with EU Juncker in Bressels

- 06:45 (US) Daily Libor Fixing

- 07:00 (UK) Weekly PM Cameron question time in House of Commons

- 07:00 (RU) Russia to sell Bonds

- 07:00 (US) MBA Mortgage Applications w/e Feb 27th: No est v -3.5% prior

- 07:00 (BR) Brazil Jan Industrial Production M/M: +2.0%e v -2.8% prior; Y/Y: -5.0%e v -2.7% prior

- 08:00 (BR) Brazil Feb Services PMI: No est v 48.4 prior; Composite PMI: No est v 49.2 prior

- 08:15 (US) Feb ADP Employment Change: +219Ke v +213K prior

- 08:15 (US) Baltic Dry Bulk Index

- 09:00 (MX) Mexico Jan Leading Indicators M/M: No est v -0.06 prior

- 09:00 (US) Fed's Evans speaks on Economy and Monetary Policy in Illinois

- 09:00 (IT) Italy Fin Min Padoan in Parliament

- 09:45 (US) Feb Final Markit Services PMI: 57.0e v 57.0 prelim; Composite PMI: 56.8e v 56.8 prelim

- 09:45 (UK) BOE's Baily at Treasury Select Committee

- 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 0.75%

- 10:00 (US) Feb ISM Non-Manufacturing Composite: 56.5e v 56.7 prior

- 10:00 (PL) Poland post rate decision press conference

- 10:30 (US) Weekly DOE Crude Oil Inventories

- 10:30 (BR) Brazil Feb Commodity Price Index M/M: +6.0%e v -5.1% prior; Y/Y: No est v -1.4% prior

- 10:30 (BR) Brazil weekly Currency Flows

- 13:00 (US) Fed's George speaks on the Economy in Kansas City

- 14:00 (US) Beige Book

- 16:00 (CO) Colombia Feb PPI Domestic M/M: No est v % prior; Y/Y: No est v -1.3% prior

- 17:00 (US) Fed's Fisher speaks at Community Forum in El Paso, Texas

- 19:30 (AU) Australia Jan Retail Sales M/M: No est v 0.2% prior

- 19:30 (AU) Australia Jan Trade Balance (AUD): No est v -0.4B prior

- 20:00 (PH) Philippines Feb CPI M/M: No est v 0.4% prior; Y/Y: No est v 2.4% prior; CPI Core Y/Y: No est v 2.2% prior

- 20:05 (NZ) New Zealand to sell NZD100M in Inflation-Indexed Bonds

- 20:30 (JP) BOJ Kiuchi speaks in Maebashi

- 20:30 (AU) RBA Dep Gov Lowe speech

- 22:35 (JP) Japan to sell 3-Month Bills

- 22:45 (JP) Japan to sell 30-Year JGB Bonds