EUROPEAN INFLATION: Slight Lowering Of March EZ HICP Forecasts
Following this morning's downward inflation surprises from France (0.9% Y/Y vs 1.1% cons) and Spain (2.2% Y/Y vs 2.5% cons) and an associated dovish repricing in near-term ECB expectations (implied odds of an April cut stand around 85% at typing, ~10pp higher on the day), some sellside analysts have trimmed their estimates for the Eurozone-wide HICP data scheduled for release Tuesday:
- Goldman Sachs: "We downgrade our Euro area headline inflation forecast for March slightly to 2.13%yoy (from 2.15% previously), and revise our core forecast down by 2bp to 2.40%yoy. This would imply a seasonally adjusted sequential core inflation pace of 0.17%mom in March on our estimates."
- JP Morgan: "Our bottom-up Euro area forecast was standing a little higher than our top-down (official) Euro area forecast. The gap between the two has now closed as French and Spanish inflation came in lower than we expected, and both our bottom-up and top-down forecasts are pointing to a 2.3%oya Euro area headline inflation reading for March (0.1%m/m sa), with risks tilted towards 2.2%"
Belgian inflation, also released today, saw a material slowdown in headline and services inflation - consensus is not available for the country, but the data looked encouraging in our view.
Italy (10:00 BST) and Germany (13:00 BST) are still to come on Monday - for a view on these please refer to our Eurozone March HICP Preview here.
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OUTLOOK: Price Signal Summary - WTI Clears Support
- On the commodity front, despite Tuesday’s pullback, a bull cycle in Gold remains in play. Recent fresh cycle highs once again confirm a resumption of the uptrend and maintain the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend and positive market sentiment. Sights are on the $2962.2, a 2.00 projection of the Nov 14 - Dec 12 - 19 price swing. The first key support to watch is $2879.0, the 20-day EMA.
- In the oil space, a bearish theme in WTI futures remains intact and Tuesday’s sell-off reinforces current conditions. The move lower has resulted in a clear breach of support at $70.20, the Feb 6 low. This confirms a resumption of the downtrend that started Jan 15 and paves the way for an extension towards $67.75, the Dec 20 ‘24 low. Key short-term resistance has been defined at $74.06, Feb 3 high. Initial resistance is at $71.49, the 50-day EMA.
EQUITIES: EU outperforms, Bank at a 14yrs high. US NVIDIA Earnings Tonight
- European Indices remain underpinned, led by better earnings today, given some of the attention on Tech stocks this Week, tonight will see major earning from US NVIDIA, expected after Markets around 21.20GMT/16.20ET.
- We Flagged at the start of 2025 that the Bank Index (SX7E) was the most interesting chart at the start of the Year.
- This is making another 14yr High, that's a 33.2% gain from the December low, or 29.6% this Year.
- Next upside resistance comes at 197.88, the February 2011 high, and the highest printed level since August 2010.
(Chart source: MNI/Bloomberg).
