Market News

IC Markets – Europe Fundamental Forecast | 31 March 2026

What happened in the Asia session?

Risk-off backdrop tied to the broader Middle‑East conflict and elevated oil prices, overlaid with softer‑than‑expected Tokyo CPI (which capped the yen rally) and mildly constructive but still vulnerable Chinese PMI prints, leading to a clear underperformance in JPY‑crosses such as USD/JPY near intervention‑watch levels, pressure on commodity‑linked AUD, and downside bias in regional equities, especially Japan and Korea, while oil and energy‑linked instruments remained well bid.

What does it mean for the Europe & US sessions?

Persistent growth fears and elevated oil prices are anchoring global risk‑off positioning, with the S&P 500 and Nasdaq near…

• Prior +0.9%
• HICP +1.9% vs +1.9% y/y expected
• Prior +1.1%

The headline estimate is the highest since August 2024 as French inflation picks up amid higher energy prices as a result of the US-Iran conflict. The monthly reading shows that consumer prices were up 0.9%, the steepest jump since February 2024.

The breakdown shows that food price inflation was seen at 1.8% (previously 2.0%) and services inflation at 1.7% (previously 1.6%). As such, core prices should keep thereabouts as in February with the latest spike here being largely energy-related. Of note, energy prices surged by 7.3% in March after exhibiting a 2.9% monthly decline in February.

But over time if allowed to become more entrenched, higher energy prices will spill over to other…

• Prior -0.9%; revised to -1.1%

And once again, German retail sales underwhelms on expectations and this time it is being made to look worse than previous times. For one, it comes alongside a negative revision to the January figure. But more importantly, it paints a negative backdrop in the month before we even see the US-Iran conflict impact hit on prices, inflation, and the economy.

Food store sales declined by 1.4% on the month while non-food store retailing saw a 0.7% increase in sales. The latter at least helps to offset slightly the negative drag on the overall report.

This kind of backdrop is not quite what you'd like to see as price pressures have already been keeping more stubborn in Europe's largest economy. Now when you have to…

• Prior +0.3%

UK house prices unexpectedly rose in March, with the jump being quite a big one at that. The monthly increase in house prices is the most since December 2024.

Typically, there is a bit of a "spring bounce" in the market. That being said, it could be a case of home buyers rushing to secure mortgage deals with the current rate amid fears of higher interest rates to come later on. That as the US-Iran conflict has significantly changed the central bank outlook and also the general trajectory of the global economy and inflation.

So, it is arguably a mix of seasonal and psychological factors driving up prices in the past month.

At the same time though, a negative hit to consumption and the overall economy is also a negative hit to the…

German import prices for the month of February showed a 0.3% increase compared to the previous month. But when benchmarked against the same month a year ago, import prices were seen down 2.3%. The latter figure is the same for January and also December last year.

The main drag for the year-on-year decline in import prices had been energy prices. Compared to February 2025, energy prices were down nearly 21% when viewing the numbers for last month. So, that's the key factor in play. That as when you exclude energy prices from the equation, import prices were seen down just 0.2% compared to February last year.

As we get into March data next month, expect the picture above to change drastically.

Destatis already notes today that "the hostilities…

• Prior +0.1%
• GDP +% vs +1.0% y/y prelim
• Prior +1.2%

More to come..

The big news as we get into the new day is this one here: Trump open to ending Iran war without reopening Strait of Hormuz - WSJ

The report says that the US might look to wind down military activity in the Middle East. That after it accomplishes in degrading Iran's naval and missile capabilities. It might be one that is tough to imagine though, as it would see US president Trump still not get what he wants exactly. That being said, is it all an attempted diversion though?

There's still talk of ground forces moving in over the past few days and that is something to be mindful of. Despite whatever reports, Trump will still need to frame this war in a way where he walks out as the victor - whatever that means.

In this case, he can boast about…

• Global stocks see biggest selling in a year. Hedge funds ramp shorts (Goldman Sachs data)
• China factory activity hits 1-year high as PMIs return to expansion
• China March official PMIs: Manufacturing 50.4 (exp 50) Non-manufacturing 50.1 (exp 49.9)
• Tokyo inflation cools further but underlying price pressures remain intact
• PBOC sets USD/ CNY central rate at 6.9194 (vs. estimate at 6.9209)
• WSJ: Trump open to ending Iran war without reopening Strait of Hormuz
• RBA March Minutes: Members agreed further tightening would likely be needed
• NZ business confidence and activity collapse. Inflation pressures remain elevated.
• Australia to scrap junior pay rates for 18–20-year-olds in major wage shift
• Japan February retail sales drop below expected and prior,…

China’s manufacturing PMI rose to 50.4 in March, a one-year high, with all PMIs returning to expansion, though rising input costs and Middle East war risks threaten the durability of the recovery.

Summary:

• China March PMIs returned to expansion across the board
• Manufacturing PMI rose to 50.4 (exp. 50.0, prev. 49.0) — 1-year high
• Non-manufacturing PMI at 50.1 (prev. 49.5)
• Composite PMI improved to 50.5 (prev. 49.5)
• Demand recovery drove rebound, including output and new orders
• Input costs surged, signalling renewed inflation pressure
• Middle East war adds downside risk via energy and trade channels

China’s factory activity expanded at the fastest pace in a year in March, with official data showing a broad-based return to growth across…

Just the data.

China March official PMIs all retrun to expansion:

• Manufacturing 50.4

expected 50, prior 49.0

Non-manufacturing 50.1

• expected 49.9, prior 49.5

Composite 50.5

• expected 50.2, prior 49.5

I'll have more to come on this separately

Summary:

• Fair Work Commission to abolish junior pay rates for 18–20-year-olds
• Around 500,000 workers set to benefit across retail, fast food and pharmacies
• Pay increases to be phased in over up to four years from December
• Junior rates to remain in place for minors under 18
• Decision removes “discounted” wages for young adult workers
• Seen as a major structural change to Australia’s wage framework

Australia’s Fair Work Commission has ruled to abolish junior pay rates for workers aged 18 to 20 across key service sectors, marking a significant shift in the country’s wage-setting framework.

The decision, which affects employees in the retail, fast food and pharmacy industries, will remove discounted wage rates for young adults, aligning their…

Summary:

• ANZ Business Confidence (Mar): 32.5 (prev. 59.2)
• ANZ Activity Outlook (Mar): 39.3 (prev. 52.6)
• ANZ Business Outlook shows weak business confidence persists
• Inflation indicators remain elevated despite softer activity signals
• Pricing intentions and cost pressures still sticky
• Activity indicators mixed, pointing to slowing momentum
• Firms cautious on outlook amid uncertainty and higher costs
• Data highlights ongoing inflation persistence risk

New Zealand business sentiment deteriorated sharply in March, even as inflation pressures remain elevated, highlighting a growing divergence between weakening activity and persistent price pressures.

The latest ANZ Business Outlook survey showed a significant pullback in forward-looking…