Sarasin Asset Management website uses cookies. A cookie is a small data file placed on your computer which captures information about your choices which allows us to improve your experience of the website, for example, by remembering your country of residence.  By continuing to access this website, you agree to be bound by our Cookie Policy.  You can accept and/or block cookies at any time by changing your browser settings.

Market news - 8 March 2019

by  Niloofar Rafiei  |  08 Mar 2019


  • As expected, the European Central Bank announced a third round of TLTRO financing operations to ensure that weaker euro area banks, particularly in Italy, remain liquid. There will be seven two-year operations implemented on a quarterly schedule, the first in September 2019 and the last in March 2021, effectively providing liquidity through March 2023.
  • The ECB also sharply downgraded near-term growth forecasts and, more worryingly, expect inflation to rise only to 1.6% by the end of 2021, the limit of their forecast horizon. This implies they do not envisage success in achieving their mandated goal of inflation “below but close to 2%”.
  • The OECD slashed its growth forecast for the eurozone economy in its interim economic outlook published this week, downgrading forecast 2019 growth to just 1% in 2019 and 1.2% in 2020. The biggest downgrades were in Germany, now forecast to grow at +0.7% in 2019 and +1.1% in 2020, and Italy, predicted to stay in recession through 2019. The main catalyst is the downside risk to global trade given the tendency towards protectionism.


  • Underlining this was the sharp decline in Chinese exports, which were weak even after discounting the seasonal noise in the data owing to Lunar New Year. Further denting sentiment were news reports quoting the U.S. Ambassador to China as saying that “the U.S. and China have yet to set a date for a summit to resolve their trade dispute as neither side feels an agreement is imminent”.


  • US nonfarm payroll gains were just +20k in February, substantially missing expectations, although this is likely a statistical aberration given the 200-300k gains being realised in recent month. Unemployment ticked down to 3.8% and average hourly earnings  hit a new cycle high of 3.4% year on year.
  • Equity markets had their poorest week of the year so far as growth concerns returned to the forefront on weak data and OECD/ECB downgrades. The delay in US/China trade negotiations as well as measures taken by Chinese authorities to cool surging A-shares also weighed, as did concerns about euro bank profitability in an era of chronically low rates and weak growth.