Flat UK retail sales blamed on poor weather as markets digest blockbuster week

EU Mid-Market Update: Flat UK retail sales blamed on poor weather as markets digest blockbuster week that saw several surprise Central Bank rate decisions.

Notes/observations

- Mixed EU indices with FTSE100 outperforming due to slightly better-than-expected Feb Retail Sales, albeit still flat to declining MoM and YoY. UK equities also given tailwind by FT article that referenced BoE Gov Bailey noting that cuts are on the table at ‘every meeting’ going forward.

- German IFO Business Climate was highest since June 2023.

- Nike’s weak FY guidance at Q3 results weighed on EU apparel names Puma, Adidas and JD Sports during European trade.

- Tesla said to trim production in China for both of its best-selling models.

- Asia closed mixed with Hang Seng under-performing at -2.2%. EU indices are -0.2% to +0.9%. US futures are +0.1%. Gold -0.6%, DXY +0.9%; Commodity: Brent -0.2%, WTI -0.2%; Crypto: BTC -1.6%, ETH -2.6%.

Asia

- Japan Feb National CPI Y/Y: 2.8% v 2.9%e; CPI Ex Fresh Food (core) Y/Y: 2.8% v 2.8%e.

- South Korea Feb PPI Y/Y: 1.5% v 1.3% prior.

- New Zealand Feb Trade Balance (NZD): -0.2B v -1.1B prior (smallest deficit in 20 months).

- RBA Bi-annual Financial Stability Review noted that risks remained elevated, but the domestic financial system was proving resilient.

- China Pres Xi to meet US CEOs in Beijing next week (March 27th).

Europe

- UK Mar GfK Consumer Confidence: -21 v -19e.

- BOE Gov Bailey reiterated view that rate cuts 'in play' at all future meetings; Did not need to see inflation to drop to 2% target in order to start cuts; Declined to say when or by how much interest rates might be cut this year.

Americas

- US Treasury Sec Yellen testified that she saw few real challenges to the USD currency as a reserve currency

- Biden Administration said to urge quick passage of spending deal (**Reminder: congressional leaders unveiled a $1.2T bipartisan spending measure for defense, homeland security and other programs. House to vote on package Friday, Senate would only hours to pass the package afterwards

- Mexico Central Bank (Banxico) cut Overnight Rate by 25bps to 11.00% to move into easing mode.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.03% at 509.60, FTSE +0.61% at 7,930.62, DAX +0.08% at 18,188.85, CAC-40 -0.21% at 8,162.62, IBEX-35 +0.29% at 10,899.26, FTSE MIB -0.09% at 34,296.00, SMI +0.02% at 11,706.10, S&P 500 Futures +0.11%]

Market Focal Points/Key Themes: European indices open generally lower, with FTSE-100 outperforming others following dovish commentary by BOE’s Gov Bailey; apparel subsector stays under pressure following Nike sales outlook, while EU shipping giant DHL trades higher after US peer FedEx results and guidance; healthcare firm Galderma holds sharp gains following IPO debut in Zurich; on corporate front, KKR announced exit of Darktrace stake, which is subsequently trading lower as much as 10%; earnings expected during US morning include Hyzon Motors.

Equities

- Consumer discretionary: Deutsche Post [DPW.DE] +2.5% (read-across from Fedex results and guidance), Adidas [ADS.DE] -0.5%, Puma [PUM.DE] -1.5% (read-across from Nike/Lululemon results and guidance), JD Wetherspoon [JDW.UK] -5.5% (results).

- Financials: Phoenix Group [PHNX.UK] +8.5% (results).

- Healthcare: Galderma [GALD.CH] +15% (IPO debut), Grifols [GRF.ES] +3.0% (Spanish regulator approvals financials).

- Industrials: Aston Martin Lagonda Global Holdings [AML.UK] +1.0% (new CEO), Renault [RNO.FR] +0.5%, Volvo [VOLVA.SE] +0.5% (completes JV Flexis SAS)

- Technology: Darktrace [DARK.UK] -9.0% (KRR exits stake).

Speakers

- ECB's Nagel (Germany, hawk) commented that the probability was increasing that could enact rate cut before summer break. Saw Jun as being more likely than April. Additional easing would not be automatic once we start. Reiterates rate cuts to be data dependent.

- Austria WIFO Quarterly Economic Forecasts cut the 2024 GDP growth from 0.9% to 0.2% while raising 2025 GDP growth from 2.0% to 2.7%. WIFO cut the 2024 CPI from 4.0% to 3.8% and cut 2025 CPI from 3.1% to 2.7%.

- India Finance Ministry Monthly Economic Review noted that a pickup in summer sowing was likely to reduce food price. Inflation outlook for the upcoming months was positive.

- Japan Cabinet Office (Govt) Mar Monthly Report maintained its overall economic assessment of seeing a gradual economic recovery despite some sluggishness.

Currencies/fixed income

- USD held onto recent gains as central bank decisions have provided the focus for this week. Green back was boosted by SNB unexpectedly cut rates and the BOE noting that the time for lowering rates was coming closer.

- EUR/USD at 1-month lows testing below 1.0820.

-GBP/USD drifted below 1.26 level despite better UK retail sales data for Feb. Pound facing headwinds after BoE Gov Bailey noted that cuts are on the table at ‘every meeting’ going forward.

- USD/JPY at 151.50 with continued focus on the pivotal 152 resistance.

- CNY currency was weaker after China PBoC lowered the daily CNY fixing by the most since early February. Dealers noted the move was perceived as a sign that the PBOC was willing to allow some weakness in the yuan.

Economic data

- (DE) Germany Jan Import Price Index M/M: 0.0% v -0.4%e; Y/Y: -.59% v -7.5%e.

- (UK) Feb Retail Sales (Ex-Auto/Fuel) M/M: +0.2% v -0.1%e; Y/Y: -0.5% v -0.8%e.

- (UK) Feb Retail Sales (including Auto/Fuel) M/M: 0.0% v -0.4%e; Y/Y: -0.4% v -0.8%e.

- (NO) Norway Feb Credit Indicator Growth Y/Y: 3.5% v 3.5% prior.

- (TR) Turkey Mar Real Sector (Manufacturing) Confidence : 103.5 v 102.0 prior; Real Sector Confidence (unadj): 104.4 v 101.5 prior; Capacity Utilization: 76.2% v 76.4% prior.

- (MY) Malaysia mid-Mar Foreign Reserves: $113.4B v $114.3B prior.

- (TH) Thailand Mar Foreign Reserves w/e Mar 15th$B v $225.4B prior.

- (CN) Weekly Shanghai copper inventories (SHFE): 285.1K v 286.4K tons prior.

- (FR) France Q4 Final Wages Q/Q: 0.4% v 0.3% prelim.

- (TW) Taiwan Feb Unemployment Rate: 3.4% v 3.4%e.

- (RU) Russia Narrow Money Supply w/e Mar 15th(RUB):18.02 T v 18.06T prior.

- (TR) Turkey Feb Foreign Tourist Arrivals Y/Y: 22.7% v 2.1% prior.

- (DE) Germany Mar IFO Business Climate: 87.8 v 85.9e; Current Assessment Survey: 88.1 v 86.8e; Expectations Survey: 87.5 v 84.7e.

- (NO) Norway Mar Unemployment Rate: 2.0% v 2.0%e; Unemployment Rate (unadj): 1.9% v 2.0%e.

- (IS) Iceland Feb Wage Index M/M: 0.2% v 0.5% prior; Y/Y: 6.8% v 7.0% prior.

- (IS) Iceland Feb Final Trade Balance (ISK): -20.5B v -20.7B prelim.

Fixed income issuance

- None seen.

Looking ahead

- 06:00 (AT) ECB's Holzmann (Austria).

- 06:00 (EU) Daily Euribor Fixing.

- 06:00 (IT) Italy Debt Agency (Tesoro) to sell €2.5-2.75b in 3.20% Jan 2026 BTP bonds;

- 06:00 (FR) France Debt Agency (AFT) announcements on upcoming issuance (bills).

- 06:25 (EU) Daily ECB Liquidity Stats.

- 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to leave One-Week Auction Rate unchanged at 16.00%.

- 07:00 (UK) Mar CBI Industrial Trends Total Orders: -20e v -20 prior; Selling Prices: 19e v 17 prior.

- 07:00 (IE) Ireland Feb PPI M/M: No est v 1.4% prior; Y/Y: No est v 2.2% prior.

- 07:00 (PT) Portugal Feb PPI M/M: No est v 0.3% prior; Y/Y: No est v -4.3% prior.

- 07:00 (BR) Brazil Mar FGV Consumer Confidence: No est v 89.7 prior.

- 07:00 (PT) ECB’s Centeno (Portugal).

- 07:00 (UK) DMO to sell £5.5B in 1-month, 3-month and 6-month bills (£0B, £B and £B respectively).

- 07:30 (IN) India Forex Reserve w/e Mar 15th: No est v $636.1B prior.

- 07:30 (IN) India announces upcoming bill issuance (held on Wed).

- 08:00 (CL) Chile Feb PPI M/M: No est v 0.8% prior.

- 08:00 (MX) Mexico Jan IGAE Economic Activity Index (Monthly GDP) M/M: +0.2%e v -0.1% prior; Y/Y: 2.6%e v 1.1% prior.

- 08:30 (CA) Canada Jan Retail Sales M/M: -0.4%e v +0.9% prior; Retail Sales (Ex-Auto) M/M: -0.5%e v +0.6% prior.

- 09:00 (PL) Poland Feb M3 Money Supply M/M: +0.9%e v -0.5% prior; Y/Y: 7.1%e v 7.7% prior.

- 09:00 (UK) Daily Baltic Dry Bulk Index.

- 09:00 (DE) ECB’s Nagel (Germany).

- 10:00 (BE) Belgium Mar Business Confidence: -12.3e v -12.8 prior.

- 13:00 (US) Weekly Baker Hughes Rig Count.

- 13:00 (EU) ECB's Lane (Ireland, chief economist).

- 14:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to cut Overnight Lending Rate by 50bps to 12.25%.