Eurozone CPI surges to 1.9%, core hits 2.4%. Eurostat’s flash estimate for February showed headline CPI climbing from 1.7% to 1.9% YoY — beating the 1.7% consensus — while core inflation jumped to 2.4% from 2.2%, well above the 2.2% estimate. Services inflation accelerated to 3.4%. The data was collected before the Iran oil shock and ECB Chief Economist Philip Lane warned a prolonged conflict could push eurozone inflation even higher. The ECB’s deposit rate stays at 2.0% but the path to cuts is narrowing.
Australia GDP smashes forecasts at +0.8% QoQ, +2.6% YoY. The Australian Bureau of Statistics reported Q4 2025 GDP well above the 0.7% QoQ consensus and the prior 0.5%. Annual growth of 2.6% was the fastest pace since early 2023 and exceeded the 2.2% estimate. Output rose across 17 of 19 industries. The household saving ratio climbed to 6.9% — a three-year high — while per capita GDP rose 0.9% YoY. The RBA, which already hiked rates last month, now faces strong pressure to hike again in May.
China Caixin Services PMI rockets to 56.7 — highest since 2023. While official NBS PMIs softened (composite 49.5, manufacturing 49.0, services 49.5), the private Caixin surveys told a starkly different story. Caixin Services surged to 56.7, crushing the 52.3 estimate and the prior 52.3 reading. Caixin Manufacturing also beat at 52.1 versus the 50.1 consensus. The divergence suggests large export-oriented state firms are under tariff pressure while private services-sector firms are thriving domestically.
Dashboard
Key releases — Tuesday, March 3, 2026
| Indicator | Actual | Cons. | Prev. | Signal |
|---|---|---|---|---|
| Eurozone CPI (YoY) Feb | 1.9% | 1.7% | 1.7% | ▲ Hot |
| Eurozone Core CPI (YoY) Feb | 2.4% | 2.2% | 2.2% | ▲ Beat |
| Italian CPI (YoY) Feb | 1.6% | — | 1.0% | ▲ Rise |
| Spanish Unemployment Chg (Feb) | +3.6K | +26.7K | +30.4K | ▲ Beat |
| Australia GDP (QoQ) Q4 | 0.8% | 0.7% | 0.5% | ▲ Beat |
| Australia GDP (YoY) Q4 | 2.6% | 2.2% | 2.1% | ▲ Strong |
| Caixin Services PMI (Feb) | 56.7 | 52.3 | 52.3 | ▲ Surge |
| Caixin Manufacturing PMI (Feb) | 52.1 | 50.1 | 50.3 | ▲ Beat |
| NBS Manufacturing PMI (Feb) | 49.0 | 49.1 | 49.3 | ▼ Miss |
| Korea Industrial Production (YoY) Jan | 7.1% | 2.2% | 1.4% | ▲ Beat |
| Japan Services PMI (Feb) | 53.8 | 53.8 | 53.7 | ■ In-Line |
| IBD/TIPP Economic Optimism | 47.5 | 50.1 | 48.8 | ▼ Miss |
| Total Vehicle Sales (Feb) | 15.80M | 15.20M | 14.90M | ▲ Beat |
| Brazil GDP (YoY) Q4 | 1.8% | 1.8% | 1.8% | ■ In-Line |
| API Crude Oil Stock (wk) | +5.600M | +2.200M | +11.400M | ▼ Build |
Europe
Inflation rebound complicates ECB path as Iran shock looms
Eurostat’s flash CPI for February 2026 delivered a genuine surprise. Headline inflation rose to 1.9% YoY — its highest since September 2025 — against a 1.7% consensus. More alarming for the ECB was the core reading, which climbed to 2.4% from 2.2%, also well above expectations. Services inflation accelerated to 3.4% from 3.2%, non-energy industrial goods picked up to 0.7%, and food held at 2.6%. Critically, the data predates the Iran conflict’s energy shock — meaning February’s reading is essentially a baseline before the real pain arrives.
The ECB’s position has become more uncomfortable. Its deposit rate sits at 2.0% and markets had been pricing no change through 2026. ECB Chief Economist Philip Lane warned that a prolonged war could push eurozone inflation higher and weigh on growth simultaneously — a stagflationary scenario the bloc hoped to avoid. ECB Governing Council member Yannis Stournaras called the conflict “another serious supply-side shock.” The March 19 meeting, which includes updated economic projections, now takes on critical significance.
Italy’s February CPI jumped to 1.6% YoY from 1.0%, while the HICP rose 0.6% MoM after a -1.0% decline in January — a sharp reversal driven by seasonal service price increases. Spain’s labour market continued to show resilience: unemployment registered only 3,600 new claimants in February, dramatically below the 26,700 consensus and January’s 30,400 — a signal that the Spanish economy remains in solid shape despite the broader uncertainty. French car registrations, however, slid 14.7% YoY, extending January’s 6.6% decline.
European equities bore the brunt of the Iran shock. The Euro Stoxx 50 dropped 3.3% on Tuesday, with Italy’s FTSE MIB falling over 4% and the DAX sliding to its lowest since December 2025. The euro weakened 0.85% against the dollar to around $1.17, reflecting Europe’s disproportionate exposure to energy imports. Italy’s car registrations jumped 14.0% YoY — the best reading in months — suggesting front-loaded consumer demand ahead of anticipated cost increases.
Verdict
The eurozone CPI beat puts the ECB in a bind. With headline at 1.9% and core at 2.4% before the oil shock, and Iran now sending energy prices sharply higher, the ECB faces a credibility test at its March 19 meeting. Rate cuts are effectively off the table for 2026. A hike — previously a fringe view — is no longer unthinkable.
United States
War premium, oil surge, and softening sentiment
US equity markets fell sharply on Tuesday as the US-Iran conflict entered its fourth day and Iran’s IRGC threatened to fire on any vessel attempting passage through the Strait of Hormuz. The S&P 500 closed down 0.94% at 6,816.63, the Dow shed 403 points (-0.83%) to 48,501.27, and the Nasdaq fell 1.02% to 22,516.69. At session lows, the S&P 500 was down 2.5% — before a Trump pledge to escort oil tankers through the Strait with US Navy vessels trimmed the declines. The VIX surged to 23.57.
WTI crude surged to close at $77.05, up over 8% on the session. Brent crude topped $85 — its highest level since July 2024. The 10-year Treasury yield rose to 4.11%, reflecting the unusual dynamic in which inflation fear — not risk-off positioning — was driving bond markets. Gold touched $5,419 intraday before a dollar strengthening pulled it back toward $5,350–$5,365 by close. The DXY index climbed above 99, erasing year-to-date losses.
On the data front, the IBD/TIPP Economic Optimism index disappointed at 47.5 against a 50.1 consensus, falling from 48.8 — suggesting consumers are already pricing in inflation anxiety. In contrast, total vehicle sales for February came in at 15.80 million SAAR, far exceeding the 15.20 million estimate and the prior 14.90 million — a sign that consumers rushed to purchase vehicles ahead of anticipated tariff-driven price increases. The Redbook retail sales measure showed 7.0% YoY growth, up from 6.7%.
FOMC members Bowman, Williams, and Kashkari all spoke during the session. No major policy signals were disclosed publicly, but the market has now pushed back its Fed rate cut expectations from July to September, with some desks pricing no cuts in 2026. API crude inventories built by 5.6 million barrels — more than double the 2.2 million estimate — though the Iran shock overwhelmed the bearish inventory signal for oil prices.
Verdict
The US market is pricing a stagflation scenario — not a growth shock. Rising oil is inflationary, not recessionary. The Fed is frozen: inflation risk prevents cuts while geopolitical uncertainty prevents hikes. The Fed funds rate stays at 3.50–3.75% through June at minimum. Friday’s nonfarm payrolls report (consensus +79K) is the next major catalyst.
Asia-Pacific
Australia blowout, China split signals, Korea resurgence
Australia’s Q4 GDP print was the standout data release of the Asia session. The economy expanded 0.8% QoQ — beating the 0.7% consensus and the prior 0.5% — for a 2.6% YoY rate that was the fastest since early 2023. Growth was broad-based across 17 of 19 industries, with both public and private demand each contributing 0.3 percentage points. Household discretionary spending increased 0.4%, boosted by Black Friday retail events, while the household saving ratio rose to 6.9% — a three-year high. Per capita GDP rose 0.9% YoY, its strongest reading since 2022.
The result vindicates the RBA’s February rate hike and makes a May follow-up hike increasingly likely, according to market pricing. The AUD/USD failed to benefit, however, trading around 0.7010 as dollar strength from the Iran shock overwhelmed the bullish domestic data. Australia’s Services PMI eased to 52.8 from 56.3 — still expansionary — while the Manufacturing PMI printed 52.4, marginally below February’s 55.7 but in solid expansion territory.
China’s PMI story showed a striking bifurcation on Tuesday. The official NBS prints showed the composite slipping to 49.5 (below the 50-expansion threshold), manufacturing at 49.0 (missing 49.1), and non-manufacturing at 49.5 (missing 49.8). Yet the private Caixin surveys — which cover smaller, export-oriented and domestic private firms — told an entirely different story. Caixin Manufacturing surged to 52.1, crushing the 50.1 estimate, while Caixin Services rocketed to 56.7 — the highest reading since 2023. The divergence points to tariff pressure on large state manufacturers, with domestic private services firms thriving.
South Korea reported January industrial production at 7.1% YoY — massively beating the 2.2% consensus and the prior 1.4%. Retail sales rose 2.3% MoM, comfortably above the prior 0.6% reading. Japan’s Services PMI held at 53.8 in line with expectations, with the composite at 53.9, confirming Japan’s sustained service sector expansion despite global geopolitical uncertainty.
Verdict
Australia’s data strengthens the RBA’s hawkish case. China’s Caixin surge suggests domestic resilience is being underestimated — but the NBS weakness signals real export headwinds. Korea’s industrial production surge at 7.1% YoY is a genuine positive that the Iran selloff buried. The region is splitting: energy importers face cost pressure; tech-exporting surplus nations face demand uncertainty.
Latin America & Africa
Brazil holds steady; Egypt and South Africa in the crossfire
Brazil’s Q4 2025 GDP came in at 1.8% YoY and 0.1% QoQ — exactly in line with consensus and unchanged from Q3 on a quarterly basis. The print confirms a slow but stable growth trajectory. CAGED formal payroll jobs for January came in at 112,330, above the 92,000 consensus, suggesting Brazil’s formal employment base is still expanding. Brazil’s IPC-Fipe inflation index rose 0.25% MoM in February, slightly above the prior 0.21% — a mild uptick worth monitoring given global energy dynamics. Colombia’s January exports surged 12.6% YoY, far above the prior 1.3%, reflecting strong commodity revenue.
The Iran conflict is generating secondary geopolitical risk across the region. Egypt’s pound breached 50 per dollar, a significant symbolic level, as investors priced in prolonged regional instability and higher energy import costs for the North African energy importer. South Africa saw a dramatic shift in rate expectations: market predictions swung from a March rate cut to a March rate hike in the space of days, driven by oil-driven inflation concerns. The rand weakened sharply as the oil shock amplified pre-existing current account vulnerabilities.
Brazil and Colombia are net energy exporters and thus beneficiaries of higher oil prices, though Brazil’s Petrobras must balance domestic fuel pricing with windfall gains. The contrast with net-importing South Africa, Egypt, and India underlines how the Iran shock is playing out in a regionally asymmetric way across emerging markets. India, on holiday for Holi on Tuesday, faces renewed current account pressure when markets reopen.
Verdict
Brazil’s steady GDP and payroll beat paint a picture of resilience. But the Iran oil shock is splitting EM: energy exporters (Brazil, Colombia) benefit, while energy importers (Egypt, South Africa, India) face currency pressure, higher inflation, and central bank credibility tests. South Africa’s expected rate reversal from cut to hike is the sharpest illustration of this dynamic.