Fra Danske Bank:
Sofie Grundvad Pedersen, [email protected] , Assistant Analyst
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In the euro area, we will receive the January unemployment data and the final February PMIs. We expect the unemployment rate to remain at 6.2% due to continued employment increases in Southern Europe. The final PMIs are likely to confirm the flash release which surprised positively in a sign of moderate growth.
Switzerland’s February inflation data is set for release this morning, with markets expecting CPI to rise 0.5% m/m (-0.1% y/y), following January’s -0.1% m/m (0.1% y/y). EUR/CHF recently saw v-shaped price action as the SNB verbally intervened to address excessive Franc appreciation. Sight deposit data and inflation remain key focus points.
In Sweden, services PMI has declined over the past two months, from 58.9 in November to 54.3 in January. Despite the decrease, Sweden appears relatively strong compared to both Europe and the US. A result exceeding the previous month would emphasize Sweden’s relative strength, but keep in mind that the services PMI is much more volatile than the manufacturing PMIs.
In the afternoon, US ISM Services and ADP private sector employment report are both due for release for February. ADP’s weekly estimates have pointed towards recovering jobs growth over the reference period. The flash PMI indicated that services sector business activity growth remained mostly steady in February.
In Poland, the National Bank is set to announce its policy rate decision. Both we and markets anticipate a 25bp cut, lowering the rate to 3.75%.
This morning, we published our Nordic Outlook – Green shoots , 4 March, with new economic forecasts globally and for the Nordic countries. The Nordic economies stand to improve in somewhat different ways, with more domestic growth in Denmark, Sweden and to some extent Finland recovering, and inflation cooling in Norway. The global economic situation is turning slightly more positive from an already decent near-term outlook. The sharp escalation of the war between Iran and the US and Israel in recent day has, at the time of writing, caused only a moderate increase in oil prices. We have lifted our inflation forecast in the euro area, but we still expect the ECB to remain unchanged at 2.00%.
Economic calendar
China’s February PMIs showed strong momentum, with manufacturing conditions improving at the fastest rate in over five years and services expanding at a 33-month high. The manufacturing PMI rose to 52.1 from 50.3, driven by new orders and output, while the services PMI surged to 56.7, boosted by customer demand. However, the Chinese New Year likely distorted the data, and upcoming months will provide a clearer picture. Moderately positive holiday spending signals suggest some upside to services, despite subdued business sentiment. However, the official PMI from NBS fell to 49.0 in February, highlighting ongoing struggles for factory orders.
In energy markets, prices continued to climb as Middle Eastern strikes intensified, with European gas prices closing at 54 EUR/MWh, up 22% d/d. Tanker traffic at the Strait of Hormuz remains almost completely paused amid heavy air strikes for the fourth consecutive day. US President Donald Trump stated that the US Navy would protect vessels “if necessary” to ensure the uninterrupted flow of energy, while also considering military protection and insurance backing for tankers in the region, as reported by Politico . French President Macron echoed these concerns, announcing plans to build a coalition to reopen and protect shipping routes. Despite these measures, experts warn they may not be sufficient to restore confidence among shipping firms, particularly given Iranian threats to target vessels navigating the strait. Brent oil prices came off earlier highs, settling at 81.4 USD/bbl, as easing tensions followed reports of potential US intervention to stabilise tanker traffic. Additionally, the EIA is set to release its Weekly Petroleum Data tomorrow, which could offer insights into whether the US may begin selling off its strategic petroleum reserve in the coming weeks.
Trump and EU , Trump threatened to cut all trade ties with Spain after the Spanish PM openly criticised US military actions and reportedly refused to allow the use of Spanish bases. During his visit, German Chancellor Merz asserted that Spain, as part of the EU, must be included in any trade agreement between the US and the EU.
In the euro area , HICP inflation rose to 1.9% y/y in February, above expectations, up from 1.7% y/y. Core inflation also exceeded forecasts at 2.4% y/y (cons: 2.2%), with core services inflation rebounding 0.4% m/m s.a., confirming January’s 0.1% m/m s.a. dip was temporary. While the Winter Olympics in Italy contributed to the inflation surprise, momentum in core inflation remains aligned with the ECB’s targets. Headline inflation undershooting the 2% target by less than expected supports the unchanged policy rate. We now expect euro area inflation to reach 2.0% y/y in March and 2.2% in Q2 due to rising European gas prices. However, the ECB is likely to look past this temporary headline inflation rise, given underlying disinflation and futures pricing indicating a short-term spike in oil and gas prices.
In the UK , the Spring Statement revealed the OBR’s latest economic forecasts. GDP growth is projected at 1.1% in 2026, down from 1.4% forecast in November, while forecasts for 2027-28 have been revised upward. Inflation is expected to fall faster than previously thought, reaching 2.3% this year. Unemployment is now forecast to peak at 5.3%, up from the previous 4.9% estimate. Fiscal headroom has been revised higher, increasing by GBP 2bn (from GBP 21.7bn to GBP 23.6bn), providing some relief to Gilt markets.
Equities: Global equities sold off materially yesterday, with price action increasingly dominated by energy markets. The direction and intra-equity rotation continues to be dictated by oil, and to an increasing extent European gas, rather than by traditional macro factors.
Notably, despite a roughly 5% increase in crude yesterday (and an additional ~2% higher this morning), the energy sector declined. This is an important signal. Markets appear to be shifting from focusing on the short-term inflationary impulse of higher energy prices toward the negative growth externalities. In other words, the macro drag is beginning to outweigh the temporary inflation boost.
We are also observing early signs of correlation shifts. The price action is gradually resembling a more classical risk-off configuration, rather than the inflation-hedge regime that initially followed the energy spike.
In the US session, equities staged a partial recovery after remarks from Donald Trump and Emmanuel Macron regarding security guarantees for shipping through the Strait of Hormuz. The VIX retraced from an intraday high near 28 back toward 23 by the close.
Asian markets are weaker this morning, with a delayed but pronounced adjustment. While the region is not directly involved in the conflict it remains structurally exposed as a large net importer of oil, including Iranian supply.
The epicentre is South Korea. The KOSPI is down close to 10% intraday, triggering temporary circuit breakers. However, this needs to be contextualised against the extraordinary gains year-to-date and over the past ten months. The speed of the decline points to forced deleveraging and margin calls rather than a pure geopolitical repricing. The Iran-related risk-off impulse has acted as the catalyst for unwinding prior exuberance.
Elsewhere in Asia, price action is negative but less disorderly. European futures are marginally positive this morning, while US futures trade modestly lower.
FI and FX: Yesterday, there was a bit of “retracement” in the global fixed income market after Trump stated that the US Navy will support and protect the oil tankers sailing through the strait of Hormuz. Hence, 10Y US government bond yield declined some 5bp yesterday afternoon, but this morning we have seen a very modest increase in US Treasury yields in Asian trading given the uncertainty on how long the war between US/Israel and Iran will last. EUR/USD also stabilised around the 116-level and has been stable in Asian trading this morning.
The pressure on the energy market continued to grow yesterday where both the oil and the European gas price rose further. The market fears that the supply disruption through the Strait of Hormuz will drag out. The US offers assistance with insurance and escort of ships through the Strait, which, if successful, might help contain further price increases.
See also our in-depth FI and FX morning comment *
Nordic Outlook – Green shoots , 4 March
Reading the Markets USD – Mind the shifting correlations , 3 March
Reading the Markets EUR – Balancing high growth and low inflation , 27 February
Reading the Markets Sweden , 27 February
Reading the Markets Denmark: Denmark adheres to EU’s budget rules with 2035 plan , 26 February
US Labour Market Monitor – Short-term stability but with structural challenges , 25 February
Report completed: 4 March 2026, 07:00 CEST
Report first disseminated: 4 March 2026, 07:30 CEST
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