USA

U.S. data during the last week pointed to a late-cycle economy that was still expanding in services but losing labour-market momentum. The February nonfarm payrolls report was the key macro release: payrolls fell by 92,000 and the unemployment rate held near 4.4%, while weekly initial jobless claims for the week ended February 28 were 213,000, still low in absolute terms but no longer improving. On activity, the February ISM Services PMI rose to 56.1, with business activity at 59.9 and new orders at 58.6, indicating that domestic demand in services remained firm even as hiring softened. Inflation did not receive a fresh weekly print, so markets traded off the latest available official readings: January CPI was 2.4% YoY and core CPI 2.5% YoY, while Q4 2025 real GDP growth stood at 1.4% SAAR and Q4 PCE inflation at 2.9%. The market implication was classic stagflation anxiety: softer jobs data arrived just as Middle East tensions pushed oil sharply higher, lifting inflation risk and hurting rate-cut hopes. By Friday, the S&P 500 fell 2.02% for the week, the Nasdaq 1.24%, and the Dow 3.01%, with energy holding up better while travel, financials, and broader cyclicals lagged.

Europe

Europe entered the last week with better-looking hard and survey data, but the region’s market performance was overwhelmed by the oil shock and its direct inflation sensitivity. Euro area flash CPI for February rose to 1.9%, up from 1.7% in January, while Q4 2025 GDP growth was confirmed at 0.2% q/q in the euro area on the latest update, with full-year 2025 growth at 1.4%. Labor conditions stayed supportive: the euro area unemployment rate fell to 6.1% in January. Business surveys were constructive—manufacturing re-entered expansion with the HCOB Eurozone Manufacturing PMI at 50.8, the first reading above 50 since August and the highest since June 2020, while the services PMI rose to 51.9 and the composite PMI also reached 51.9, indicating modest but broadening growth. Retail demand was softer, with January euro-area retail trade volume down 0.1% m/m. Even so, equities sold off hard because the Middle East conflict raised fears of imported energy inflation and weaker real growth; Reuters reported the STOXX Europe 600 dropped 5.5% for the week, its worst week in nearly a year, while London also logged its worst week in almost a year and Frankfurt, Paris, and Madrid suffered their sharpest weekly falls in over a year. In short, the macro flow was improving, but markets traded the external shock rather than the cyclical recovery.

Japan

Japan’s macro releases were comparatively constructive. The final February services survey showed the Japan Services PMI at 53.8, the fastest pace since May 2024, and the composite PMI rose to 53.9, signaling solid private-sector expansion led by domestic demand. January household data were mixed: real consumption expenditures for two-or-more-person households fell 1.0% YoY, but nominal income for workers’ households rose and real income improved. Labor market conditions remained tight, with Japan’s official unemployment rate at 2.7% in January. Inflation, based on the latest official nationwide reading available entering the week, was 1.5% YoY in January. After the reporting week ended, Japan also revised Q4 2025 GDP up to 1.3% annualized, underscoring that the economy entered 2026 with better momentum than first thought. Yet Japanese equities were still vulnerable to the global oil-and-risk-off move because higher energy prices squeeze an import-dependent economy and complicate the Bank of Japan outlook. The week therefore ended with a more defensive tone in Japanese stocks: domestic macro was respectable, but external shocks dominated sentiment, keeping the Nikkei 225 and TOPIX under pressure into the following Monday’s sharper regional selloff.

China

China’s last week was dominated by a split macro picture and major policy signaling from the National People’s Congress. Official February PMIs were soft: the manufacturing PMI fell to 49.0, the non-manufacturing index was 49.5, and the composite output index slipped to 49.5, pointing to weaker activity around the Lunar New Year period and continued softness in employment and new orders. But private surveys were materially stronger: the S&P Global/Reuters-reported private manufacturing PMI jumped to 52.1, the fastest expansion in more than five years, and the services PMI surged to 56.7, a 33-month high, suggesting that export-linked and more market-oriented firms were seeing a better demand backdrop than the official survey implied. Policy-wise, Beijing set a 2026 growth target of 4.5%–5%, below last year’s 5% outcome, and paired it with targeted support such as a planned 300 billion yuan capital injection into major state banks and broader support for technology and investment. Inflation data released just after the week ended showed February CPI at 1.3% YoY and core CPI at 1.8%, indicating that consumer prices were finally firming even as industrial and property-related weakness persisted. For equities, the result was relative resilience rather than outright strength: mainland and Hong Kong shares were supported by the policy package and strong private PMIs, but upside was capped by the weaker official PMIs, lingering property-sector stress, and the global risk-off move triggered by oil and geopolitics. That left the Shanghai Composite and Hang Seng trading in a tug-of-war between domestic stimulus hopes and external macro headwinds.