MNI China Daily Summary: Friday, February 28

MNI: EU Seeks To Avoid Stigma From Fiscal Opt Outs For Defence

MNI BRIEF: Consumer Inflation Outlook Slows - ECB Survey

MNI BRIEF: Xi Calls For Greater Consumption To Boost Demand

MNI BRIEF: China To Fight Against Extra U.S. Tariffs: MOFCOM

MNI BRIEF:China's Politburo Eyes More Proactive Macro Policies

MNI: GERMANY NRW FEB CPI +0.4% M/M, +1.9% Y/Y

MNI: BADEN WUERT FEB CPI +0.5% M/M, +2.5% Y/Y

MNI: BAVARIA FEB CPI +0.4% M/M, +2.4% Y/Y

GERMANY: Official Interim Election Results Tilt Towards Missing BSW & FDP

GERMANY: Economy Ministry Lowers 2025 Growth Forecast As Expected

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Executive Summary:

  • JAPAN
  • Japan's Feb Tokyo CPI print came in below expectations. The headline printed at 2.9%y/y, against a 3.2% forecast and prior outcome of 3.4%. Ex fresh food was 2.2%y/y (forecast of 2.3% and 2.5% prior). The ex fresh food, energy measure was 1.9%y/y, unchanged from Jan, but under the 2.0% forecast.
  • The y/y IP trend recovered through the late 2024, but remained modest from an historical standpoint. The detail showed a sharp fall in capital goods with durable consumer goods providing some offset.
     
  • AUSTRALIA
  • January underlying trimmed mean rose 0.1pp to 2.8%, but still below the top of the RBA’s 2-3% band. The seasonally adjusted data is consistent with the RBA remaining cautious with it stating that “upside risks remain”. The seasonally-adjusted CPI ex volatile items and holiday travel rose 0.3% m/m to be up 2.9% y/y in January. The 3-month annualised rate increased to 3.1% from 1.2%.
  • RBA Deputy Governor Hauser reiterated the reasons for the February rate cut to the Senate Economics Committee but added that the economic impact of heightened uncertainty from global trade contributed to the decision.
     
  • NEW ZEALAND
  • New Zealand Q4 2024 retail sales (ex inflation) were stronger than forecast, rising 0.9%q/q, against a 0.5% market expectation. This was the firmest q/q print since the end of 2021. Stats NZ noted: "Ten of the 15 retail industries had higher retail sales volumes in the December 2024 quarter."
  • ANZ February business confidence improved 4 points to 58.4, while the activity outlook was slightly lower at 45.1 after 45.8. The Q1 average of both measures though is below Q4 signalling a more cautious view on the economy going forward. After rising in January, cost & wage expectations eased and inflation expectations a year ahead moderated 0.2pp to 2.5%, but pricing intentions rose for the third straight month.
  • January filled jobs data are tentatively suggesting that the labour market is stabilising.
     
  • SHORT TERM RATES
  • In the $-bloc, rate expectations through December 2025 have softened sharply over the past week, except in New Zealand, where pricing remains largely unchanged. The US and Canada are down 25bps and 23bps, respectively, while Australia has eased 17bps.
     
  • CHINA
  • China’s February PMIs are projected to show a distorted view of manufacturing and services given the Lunar New Year holidays that led into the start of the month.
     
  • ASIA EQUITY FLOWS
  • Another heavy day of outflows for Taiwan taking the past 5 session's to a net flow of about $2.5b. Investors have been dumping Asian equities this past week as tech stocks sell-off and Trump's Tariffs deadlines near.
     
  • GLOBAL
  • US President Trump said there will be an additional 10% on imports from China following 10% imposed earlier in February. Other Asian countries are yet to be targeted but most have large export shares to China and could be indirectly impacted.


 

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Executive Summary:

  • JAPAN
  • Japan's Feb Tokyo CPI print came in below expectations. The headline printed at 2.9%y/y, against a 3.2% forecast and prior outcome of 3.4%. Ex fresh food was 2.2%y/y (forecast of 2.3% and 2.5% prior). The ex fresh food, energy measure was 1.9%y/y, unchanged from Jan, but under the 2.0% forecast.
  • The y/y IP trend recovered through the late 2024, but remained modest from an historical standpoint. The detail showed a sharp fall in capital goods with durable consumer goods providing some offset.
     
  • AUSTRALIA
  • January underlying trimmed mean rose 0.1pp to 2.8%, but still below the top of the RBA’s 2-3% band. The seasonally adjusted data is consistent with the RBA remaining cautious with it stating that “upside risks remain”. The seasonally-adjusted CPI ex volatile items and holiday travel rose 0.3% m/m to be up 2.9% y/y in January. The 3-month annualised rate increased to 3.1% from 1.2%.
  • RBA Deputy Governor Hauser reiterated the reasons for the February rate cut to the Senate Economics Committee but added that the economic impact of heightened uncertainty from global trade contributed to the decision.
     
  • NEW ZEALAND
  • New Zealand Q4 2024 retail sales (ex inflation) were stronger than forecast, rising 0.9%q/q, against a 0.5% market expectation. This was the firmest q/q print since the end of 2021. Stats NZ noted: "Ten of the 15 retail industries had higher retail sales volumes in the December 2024 quarter."
  • ANZ February business confidence improved 4 points to 58.4, while the activity outlook was slightly lower at 45.1 after 45.8. The Q1 average of both measures though is below Q4 signalling a more cautious view on the economy going forward. After rising in January, cost & wage expectations eased and inflation expectations a year ahead moderated 0.2pp to 2.5%, but pricing intentions rose for the third straight month.
  • January filled jobs data are tentatively suggesting that the labour market is stabilising.
     
  • SHORT TERM RATES
  • In the $-bloc, rate expectations through December 2025 have softened sharply over the past week, except in New Zealand, where pricing remains largely unchanged. The US and Canada are down 25bps and 23bps, respectively, while Australia has eased 17bps.
     
  • CHINA
  • China’s February PMIs are projected to show a distorted view of manufacturing and services given the Lunar New Year holidays that led into the start of the month.
     
  • ASIA EQUITY FLOWS
  • Another heavy day of outflows for Taiwan taking the past 5 session's to a net flow of about $2.5b. Investors have been dumping Asian equities this past week as tech stocks sell-off and Trump's Tariffs deadlines near.
     
  • GLOBAL
  • US President Trump said there will be an additional 10% on imports from China following 10% imposed earlier in February. Other Asian countries are yet to be targeted but most have large export shares to China and could be indirectly impacted.