EUROPEAN FISCAL: Austria Eyes 4.5% GDP Deficit, A Touch Above Council Estimates

• On the commodity front, a clear uptrend in Gold remains intact and this week’s resumption of the bull cycle reinforces current conditions. The yellow metal has delivered another all-time high and breached the psychological $3000.0 handle. Bulls have their sights on 3034.51 next, a 2.382 projection of the Nov 14 - Dec 12 - 19 price swing. Note that moving average studies are in a bull-mode position, highlighting a dominant uptrend and positive market sentiment. First support lies at $2922.2, the 20-day EMA.
• In the oil space, a bearish condition in WTI futures remains intact and the latest recovery appears corrective - for now. Recent weakness resulted in a breach of $70.20, the Feb 6 low. This confirmed a resumption of the downtrend that started Jan 15 and has paved the way for an extension towards $63.61 next, the Oct 10 ‘24 low. MA studies are in a bear-mode position, highlighting a dominant downtrend. Key pivot resistance to watch is $69.77, 50-day EMA.

Source: Bloomberg

The Eurozone auto sector generally saw production increase sequentially in January although it remains firmly below pre-pandemic levels as it struggles to keep up with Chinese competitors and emission targets.

• The seasonally adjusted January data from three of the four large Eurozone members showed M/M increases in vehicle production. France and Germany both increased 6.4% M/M and Italy increased 5.1% M/M, although Spain saw its biggest M/M fall since March 2022 (-11.6%).
• These increases do have to be caveated by the volatility in the data. For instance, Germany’s increase followed -10.4% M/M (sharpest since Mar 2022) and France's increase followed -11.1% M/M (sharpest since May 2021).
• The below chart more clearly shows these weak trends, with production levels comfortably below pre-Covid levels.
• This weakness continues to be reflected in car manufacturer decisions, with Audi announcing cutting 7,500 jobs in Germany by the end of 2029 due to "immense challenges" as the auto industry battles slowing demand for electric vehicles and rising competition from China.
• Note, the EU Auto Industrial Action Plan to drive innovation, sustainability, and competitiveness in the automotive sector was unveiled on 5th March. Whilst encouraging it is still very early to determine its effectiveness and on top of this it does not provide flexibility to car manufacturers in the Eurozone wide CO2 emissions 2035 targets (though the EU are considering a review to amend standards to consider performance average over a three-year period to offset shortfalls). Rather, the plan is aimed at supporting the automotive sector to keep pace with technological advancements whilst becoming a 'leader' in sustainable solutions. The plan also emphasised the success of the framework "will be up to Member States to ensure that this framework is efficiently implemented".