[10:25 AM] Gonzalo Canete

πŸ“ˆ Macro-News round-up:

πŸ‡ΊπŸ‡Έ US: Yesterday, US core PCE inflation for January fell by 0.1 percentage points to 2.4%, after the core PCE price level increased by 0.4% month over month. The result was in line with general expectations.

πŸ’΅ The DXY dollar’s response, hours after the data, a slight rebound to 104.15 at the moment. It is important, because it has remained above the support levels we mentioned yesterday, not ruling out, therefore, its upward rally towards 107.50. US stocks have somewhat increased. The NASDAQ is up 0.92 percent and the S&P 500 is up 0.52%.

πŸ‡ͺπŸ‡Ί Europe: Europe’s PMIs continue to indicate economic contraction, all of them below 50. With the exception of countries such as Spain, Greece or Norway, which keep their manufacturing PMIs in expansionary zones. 

πŸ‡©πŸ‡ͺ Particularly dramatic is the case of Germany, whose manufacturing PMI stands at 42.5. Despite all this, its stock market index continues to break new highs as if nothing had happened, DAX40 is heading towards 18,000 points.

πŸ‡¨πŸ‡³ China: The official manufacturing purchasing managers’ index (PMI) dropped from 49.2 in January to 49.1 in February due to a decline in the output component. It was in line with a median expectation of 49.1 in a Reuters survey and below the 50-point threshold that divides expansion from decline. The NBS manufacturing PMI shows a decline in new export orders for eleven months running.

πŸŽ‰ Since this year’s Lunar New Year (LNY) fell on February 10 and many workers took the holiday to travel home, seasonal considerations played a part in some of the weakening.

πŸ“Š Fortunately, the official PMI for non-manufacturing (which includes construction and services) increased to 51.4 in January from 50.7 in January, which was the highest level since September of previous year.

πŸ“ˆ China’s 2024 full-year growth target is not expected to be disclosed until Tuesday at the legislative rubber-stamp meeting, but analysts predict Beijing will stick to its 5% growth objective from the previous year.

πŸ‡ΉπŸ‡Ό Taiwan likewise saw a somewhat faster rate of reduction in industry activity.

πŸ‡―πŸ‡΅ Japan: The purchasing managers’ index (PMI) for manufacturing in Japan indicates that factory activity is declining at its quickest rate in over three years. Suggesting that the Japanese manufacturing sector’s operating conditions will continue to deteriorate for another month.

πŸ’Έ The Bank of Japan’s challenge in trying to pull out of ultra-easy monetary policy has been made more difficult by worrying new data that indicates the weakness observed in Japan during the second half of last year has continued into the first quarter of 2024.

πŸ“‰ Japan’s ranking as the third-largest economy in the world fell to Germany in the fourth quarter of 2023 due to a decline in corporate and consumer expenditure.

🌏 South Korea and India shows some good data: In February, South Korea’s export growth outperformed market expectations and continued to grow for a fifth month in a row as a spike in semiconductor demand offset a fall in car sales. According to India’s PMI, global demand growth and a reduction in inflationary pressures have caused manufacturing activity to rise at its quickest rate in five months.

🌍 Geopolitics: The tragedy continues to come from the Middle East. Yesterday more than 100 people were killed in Gaza in an Israeli attack, where tanks and snipers fired during the delivery of food from humanitarian aid trucks.

πŸ‡ͺπŸ‡Ί Josep Borrell, the head of EU foreign affairs, condemned the killings of Palestinians and describing the incident as “totally unacceptable.”
Israel said that fatalities had been ran over or trampled and placed the blame for the killings on the masses that encircled the assistance trucks.

πŸ” The asymmetric response of Western leaders, who are compromising national budgets by sending funds to finance US armaments in the Ukrainian war, is surprising. Meanwhile, the EU has no similar action in support of Gaza, a region that does not even have an army to defend itself.