International markets posted mostly gains this week: DAX closing at 23,447.29 (+1.95%), Hang Seng closing at 25,465.60 (+1.55%), CAC 40 closing at 7,911.53 (+1.30%), Euro Stoxx 50 closing at 5,716.61 (+1.13%), MSCI EM closing at 56.80 (+0.25%), FTSE 100 closing at 10,261.15 (-0.23%), Nikkei 225 closing at 53,819.61 (-1.44%), ASX 200 closing at 8,617.10 (-2.64%). European indices outperformed on average (+1.04%); Asia-Pacific lagged (-0.84% average); Emerging Markets (MSCI EM) moved +0.25%.
The biggest gainer on the FX front was the Australian Dollar, gaining 1.53% against the dollar — a tailwind for unhedged holdings in that currency. Elsewhere: the Japanese Yen lost 0.52% (Yen weakness keeping carry trades in play); the British Pound lost 0.63%; the Euro lost 0.89% (Euro slide a headwind for unhedged EFA/FEZ holders); the Swiss Franc lost 1.27%.
China dominated the international narrative this week. China's economy has an outsized reach across global markets — it's the top trading partner for most of Asia-Pacific and a critical source of demand for commodity exporters like Australia (AUD, EWA) and Brazil (EWZ). Weak Chinese data drags EM equities broadly (EEM, FXI) and tends to put downward pressure on industrial metals and energy, feeding back into commodity-linked currencies. Strong Chinese data has the opposite effect: a rising tide that lifts EM, APAC, and commodity-exposed portfolios.
On the data front: Japan GDP Final (Q4 2025, QoQ) missed at 0.6% vs. 0.7% expected. Growth disappointing raises the probability of earlier rate cuts — a potential tailwind for bond proxies and rate-sensitive sectors, but a warning sign for cyclicals. UK Monthly GDP (January, MoM) beat at 0.2% vs. 0.1% expected. Stronger-than-expected growth reduces the urgency for rate cuts and supports corporate earnings — a modest positive for the region's equities. China CPI (February, YoY) missed at -0.7% vs. -0.5% expected. Softer-than-expected inflation opens the door for the relevant central bank to cut rates — a positive for rate-sensitive assets and local bond proxies. Eurozone Industrial Production (January, MoM) missed at -0.5% vs. 0.3% expected.
Next week's international calendar is active. The ECB rate decision is the marquee event — markets will parse every word of the statement and press conference for signals on the pace of cuts. A cut flags the ECB is prioritising growth over inflation vigilance, lifting European equities (EFA, FEZ) but likely weakening the Euro — a headwind for unhedged holders. A hold keeps EUR supported but pushes out the rate-cut tailwind for rate-sensitive sectors; the BOJ meeting is the key risk event — any hawkish signal or rate hike would strengthen the Yen sharply, simultaneously lifting unhedged Japan ETF returns while compressing Nikkei gains for domestic investors. A dovish hold keeps the carry trade on and Yen weak. Central bank decisions in particular can drive sharp simultaneous moves in equities, bonds, and currencies — size positions before the announcement, not after. Secondary releases to monitor: Japan CPI (February, YoY), Eurozone CPI Final (February, YoY).
International markets were regionally split this week. The best performer was DAX (Europe) at +1.9%, while ASX 200 (Asia-Pacific) was the weakest at -2.6%. European stocks had a solid week (up +1.0% on average) — a win if you hold European ETFs; Asia-Pacific declined (-0.8% average) — a soft week for the region; Emerging markets (MSCI EM) were largely flat (+0.2%).
China dominated the international narrative this week. Activity data from China has an outsized effect on EM equities and commodity-linked assets. the Australian Dollar strengthened 1.5% against the dollar — a tailwind for unhedged holdings in that currency.
Headline CPI came in cooler than expected at -0.7%. Progress on inflation gives the relevant central bank more room to cut rates — a positive for rate-sensitive assets.
ECB Interest Rate Decision is the key event next week. A cut signals the ECB is prioritising growth — positive for European equities (EFA, FEZ) but may weaken the Euro, creating a currency headwind for unhedged holders. A hold keeps EUR supported but delays the rate-cut tailwind for rate-sensitive sectors. Size positions before the announcement, not after.
🇪🇺 Europe
🌏 Asia-Pacific
🌍 Emerging Markets
| Index | Region | Close | Weekly % | Week Range |
|---|---|---|---|---|
| DAX | Europe | 23,447.29 | +1.95% | 22,927.55 – 24,061.15 |
| Hang Seng | Asia-Pacific | 25,465.60 | +1.55% | 24,906.00 – 26,149.64 |
| CAC 40 | Europe | 7,911.53 | +1.30% | 7,768.11 – 8,107.19 |
| Euro Stoxx 50 | Europe | 5,716.61 | +1.13% | 5,543.42 – 5,862.07 |
| MSCI EM | Emerging Markets | 56.80 | +0.25% | 56.24 – 59.88 |
| FTSE 100 | Europe | 10,261.15 | -0.23% | 10,082.00 – 10,447.50 |
| Nikkei 225 | Asia-Pacific | 53,819.61 | -1.44% | 51,407.66 – 55,745.38 |
| ASX 200 | Asia-Pacific | 8,617.10 | -2.64% | 8,457.20 – 8,851.00 |
| Currency Pair | Rate | Weekly % |
|---|---|---|
| AUD/USD | 0.7075 | +1.53% |
| JPY/USD | 0.0063 | -0.52% |
| GBP/USD | 1.3223 | -0.63% |
| EUR/USD | 1.1423 | -0.89% |
| CHF/USD | 1.2640 | -1.27% |
| Date | Event | Actual | Expected | Previous | Surprise |
|---|---|---|---|---|---|
| 2026-03-09 | Japan GDP Final (Q4 2025, QoQ) | 0.6% | 0.7% | -0.4% | Below |
| 2026-03-10 | UK Monthly GDP (January, MoM) | 0.2% | 0.1% | -0.1% | Above |
| 2026-03-11 | China CPI (February, YoY) | -0.7% | -0.5% | 0.5% | Below |
| 2026-03-12 | Eurozone Industrial Production (January, MoM) | -0.5% | 0.3% | -0.4% | Below |
📊 Japan GDP Final (Q4 2025, QoQ)
Japan's Q4 2025 GDP final reading was revised slightly down to +0.6% QoQ from the preliminary +0.7%, a small but directionally negative revision. The economy expanded in Q4 on stronger consumption and net exports, but the downward revision tempers optimism about the pace of recovery. The BOJ will take note — a weaker growth profile reduces urgency to hike rates further, which may keep the Yen under mild pressure and extend the carry trade.
📊 UK Monthly GDP (January, MoM)
UK GDP rose 0.2% MoM in January, beating the 0.1% consensus and reversing December's contraction. Services led the rebound, with retail and financial services both contributing. The upside surprise modestly reduces the case for an imminent BOE rate cut, lending short-term support to sterling. That said, one month does not establish a trend — the UK economy remains fragile, and the BOE will want confirmation across multiple prints before altering its rate path.
🔥 China CPI (February, YoY)
China's CPI fell 0.7% YoY in February, worse than the -0.5% consensus and swinging sharply from January's +0.5% (which was elevated by Lunar New Year spending). The print underscores persistent deflationary pressure in the Chinese economy, driven by weak domestic demand and falling goods prices. For investors, sustained deflation in China is a headwind for EM equities (EEM, FXI) and commodity-linked assets — it signals the PBOC may need to ease further to stimulate demand.
📈 Eurozone Industrial Production (January, MoM)
Eurozone industrial output contracted 0.5% MoM in January, missing the +0.3% consensus and extending the prior month's decline. Germany and France were the primary drags, with weak orders in automotive and capital goods. The miss adds to the case for ECB rate cuts — sluggish industrial activity reinforces the growth-over-inflation calculus the ECB will face at its March 19 meeting. European industrials (EWG, EWQ) remain under pressure until demand signals turn.
| Date | Event | Importance |
|---|---|---|
| 2026-03-18 | UK CPI (February, YoY) | High |
| 2026-03-19 | ECB Interest Rate Decision | High |
| 2026-03-19 | BOJ Rate Decision | High |
| 2026-03-20 | Japan CPI (February, YoY) | Medium |
| 2026-03-20 | Eurozone CPI Final (February, YoY) | Medium |
| Signal | Suggested Action |
|---|---|
| The Euro weakened 0.89% against the USD | A headwind for unhedged European equity exposure (EFA, FEZ, EWG). Consider currency-hedged alternatives (HEDJ) or reduce European allocation until the Euro stabilises. |
| The Japanese Yen weakened 0.52% against the USD | This reduces USD returns on unhedged Japan exposure (EWJ). Watch BOJ policy signals; any rate hike could trigger a sharp Yen reversal. |
| Japan GDP contracted below expectations (0.6% vs. 0.7%) | Growth weakness reduces the BOJ's appetite for further rate hikes. Consider reducing EWJ near-term; a dovish BOJ would weaken the Yen and compress USD returns on Japan equities. |
| ECB Rate Decision on 2026-03-19 | A key event for EUR and European equities. Reduce position size in EFA, FEZ, EWG ahead of the announcement; a surprise cut or hawkish hold could drive outsized FX and equity moves. |
| BOJ Rate Decision on 2026-03-19 | Watch for any YCC or rate-hike signals. A hawkish surprise would likely strengthen the Yen sharply and create volatility in unhedged Japan exposure (EWJ). Carry-trade unwinding could ripple into EM assets. |
| Eurozone CPI Flash on 2026-03-20 | A hot print would extend the ECB hold and pressure European bond proxies, while a soft print opens the door for H2 rate cuts, supportive of EFA, FEZ, and EUR-denominated duration. |