In focus today
Markets will be looking closely for any additional comments from the Trump administration confirming or rejecting the narrative that the war in the Middle East is getting close to an end.
From the US, the NFIB’s small business optimism index is due for release for February. Business sentiment has recovered gradually over winter.
After surprisingly high Norwegian inflation in January, the February figures released today will be extremely important in terms of the interest rate outlook going forward. We suspect that part of the price increase in January was one-off effects that will not be reversed in February, while some of it is probably an expression of underlying price pressure in parts of the economy. We expect that core inflation rose 0.7% m/m in February, which is roughly in line with the historical pattern. Due to base effects, this will pull the annual growth rate down to 3.0%, because both food prices and non-rent service prices will rise somewhat less than last year.
In Denmark, February inflation data is released today. This inflation print includes about 70% of the yearly rent increases. Considering the 21% weight of rents in the consumer basket, this is key for the inflation level throughout the coming year. It will also be interesting to see whether the declining trend in food inflation continues. We expect inflation at 0.9%, up from 0.8% in January on particularly higher electricity prices.
In Sweden, focus will be on the January activity data released today. While the GDP indicator tends to be volatile, it can offer an early signal for actual growth trends. The consumption indicator, typically more stable, will provide valuable insight into the situation for households.
Economic and market news
What happened overnight
Global markets rebounded overnight, following sharp declines on Monday, as US President Donald Trump suggested the war in Iran could end soon, easing fears of prolonged inflationary pressures. The oil market has been on a rollercoaster ride, with Brent crude trading as high as 119 USD/barrel early Monday before plunging to as low as 88 USD/barrel last night. At the time of writing, it trades around 94 USD/barrel, as the market weighs Trump’s comments, the possible easing of oil-related sanctions on Russia, and a potential release of strategic reserves. The key focus remains whether oil shipments through the Strait of Hormuz will resume.
Asian markets staged a strong recovery, with Japan’s Nikkei up 2.4% and South Korea’s Kospi up 4.6% at the time of writing, while European futures pointed higher. In the US, the S&P 500 rebounded after Monday’s decline, where the Dow Jones and S&P 500 closed at +0.8% and +0.5%, respectively. Bond yields retreated, with the US 10-year Treasury yield down to 4.12%, as inflation concerns eased slightly.
In China, exports surged 21.8% y/y in January-February, significantly exceeding expectations (7.1%). The growth was driven by strong electronics demand and surprising strength in clothing, textiles and bags. The trade surplus reached USD 213.6bn, highlighting China’s export resilience despite US tariff policies. The robust export momentum is broadly expected to continue, supported by demand for electric vehicles, batteries and solar cells.
What happened yesterday
Iran’s Revolutionary Guards declared they would block all oil exports from the Middle East if US and Israeli attacks continue, effectively shutting the Strait of Hormuz, which handles one-fifth of global oil supply. In response, US President Donald Trump warned that any attempt to block oil shipments would result in far harsher strikes, stating the US would hit Iran “twenty times harder” than before. The development underscores the likelihood of prolonged tensions in the region but apparently eased market expectations.
In the US, Anthropic filed lawsuits against the government to challenge its designation as a supply-chain risk and blacklisting of its AI technology, Claude, for military use. The Pentagon’s decision stems from Anthropic’s refusal to remove restrictions on using its AI for autonomous weapons and domestic surveillance, citing ethical concerns. President Trump ordered all federal agencies to cease using Claude, escalating tensions between Anthropic and the government.
In pharmaceuticals, Novo Nordisk struck a deal with US telehealth company Hims & Hers to sell its blockbuster Wegovy and Ozempic drugs directly through Hims’ platform. The deal resolves a legal dispute from February and focuses on offering FDA-approved treatments at competitive prices (USD 149-299/month). Shares of Hims rose 36% while Novo Nordisk rose 2.7% following the announcement, as the deal reflects growing demand for accessible obesity treatments and strengthens Novo’s position amid rising competition in the US market.
In the euro area, the Sentix investor confidence indicator declined to -3.1 from 4.2, in line with consensus expectations. The drop was largely attributed to the war in Iran, which has unsettled investors and financial markets.
Equities: Equities followed the oil price yesterday. S&P 500 that was scheduled to decline at least 2% according to morning futures eventually closed 0.9% higher amid the oil price plunge. Stoxx 600 that was down more than -2% at open, closed down a meagre -0.6%. European futures indicate an opening just below 1% today. US futures have dipped into negative, however, as the oil price has rebounded somewhat since close.
It is not the level of the oil price but the longevity of it that matters for equities. Our capital goods analysts have estimated that a 10% rise in the oil price hits operating earnings in their companies between 1-3%, all things held constant. A 120-dollar oil price would thereby strip off anything between 7-20% – sizable indeed, if it would last. Perhaps this has served as a timely reminder to investors on why software multiples have had a premium to HALO-sectors in the past, as software is immune to raw material spikes or tariffs, for that matter. Tech stocks rebounded last week and continued to fare well yesterday, with the US tech sector up 2% in the US session, thereby outperforming the worst performing sector, financials, by 2.5pp.
FI and FX: Energy markets were the big mover yesterday as risk-off sentiment continued, USD strengthened and equities declined. Brent crude declined from an overnight high of almost USD 120/bbl to just below USD 100/bbl. Fixed income sold off heavily in the morning session but recovered throughout the day and yields ended the day at an almost unchanged level. The market is weighing US President Trump’s hint that the war could end soon, possible easing of oil related sanctions on Russia and release of strategic reserves. Overnight, EUR/USD rose back above 1.16, UST yields declined and equities rebounded.
