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UK

UK flash services in February PMI 60.8 vs 55.2 expected.

Latest Markit/CIPS data, prior 54.1, manufacturing PMI 57.3 vs 57.5 expected  prior 57.3, composite PMI 60.2 vs 54.2 expected

This is the fastest rate of growth in economic activity in eight months, as the services sector recovers strongly as the omicron effect fades. The increase is being aided by a strong rebound in consumer spending on travel, leisure, and entertainment. However, price pressures remain an issue, with input costs increasing again in February, approaching the survey-record high set in November last year. According to Markit, the latest PMI surveys show a resurgent economy in February, as business activity increased after COVID-19 containment measures were relaxed.

With the PMI’s gauge of output growth accelerating significantly in February and cost pressures reaching their second highest level on record, the odds of an increasingly aggressive policy tightening have shortened, with a third back-to-back rate hike looking increasingly likely in March.

However, signs of a worsening plight for manufacturers will need to be monitored, as will the service sector’s new business index for signs of the demand revival losing steam. The rising cost of living, higher energy prices, and increased uncertainty caused by Ukraine’s escalating crisis have increased downside risks to the demand outlook.

Equity

• As jitters persist, equity gains dissipate.
• Just like that, markets are starting to look nervous again.
• The Kremlin headline triggered the reaction, but to be honest, it didn’t say much that we didn’t already know. Even from the start, the Biden-Putin meeting was not a done deal. However, the fact that Moscow is not pushing the issue is making investors nervous in European trading. Regional indices have pared their gains, with some currently trading lower on the day. Meanwhile, the S&P 500 futures (which were up 0.9 percent earlier) are now only up 0.2 percent, as early optimism has faded significantly.
• In terms of currency, the impact is less pronounced, with the AUD/USD remaining up 0.6 percent at 0.7215, close to the day’s highs. The euro did give up some ground against the dollar, with the EUR/USD trading at 1.1360, down from a high of 1.1390 earlier. Meanwhile, the USD/JPY is 0.1 percent lower at 114.89.
• Biden-Putin meeting boosts market optimism. Eurostoxx +0.7%, Germany’s DAX is up 0.9%, CAC 40 +0.8%, FTSE +0.6% & IBEX +0.7% .
• To begin the session, it appears that traders and investors are building on earlier news about a Biden-Putin meeting, assuming that Russia does not invade Ukraine. Hopes for dialogue are boosting market confidence that there will be no significant military escalation for the time being.
• S&P 500 futures are up 0.8 percent, Nasdaq futures are up 0.7 percent, and Dow futures are up 0.8 percent in the United States.

Kremlin

There are currently no concrete plans for a Putin-Biden meeting, according to the Kremlin. Remarks from the Kremlin on the latest Ukraine situation. A meeting is possible if leaders see a need for it. Tensions are rising over Ukraine, diplomatic contacts are still active.

The situation in Donbass is extremely tense and worrying, with shelling and provocations. Putin will address the Security Council soon; this is “not a regular session”

The headlines are dulling the lustre of earlier risk trades, but there is still hope for dialogue. A meeting between Lavrov and Blinken is possible this week, according to a Kremlin spokesperson.

 For the time being, that’s as far as they’d go to confirm any sort of exchange.

Meanwhile, they continue to inflame tensions in Donbass, leaving some room for interpretation.

The US dollar has pared some of its losses against the euro, with EUR/USD now trading at 1.1360, down from a high of 1.1390 earlier.