With Rumor Mill in Overdrive, Financial Markets Get Whipsawed – Currency Thoughts
With Rumor Mill in Overdrive, Financial Markets Get Whipsawed
March 4, 2026
A perfect storm of war, AI, and constantly fluctuating official statements regarding the middle eastern conflict is afoot for an out-of-control rumor mill. There’s been a wide reversal in market momentum during the overnight hours after an unconfirmed report that Iran intelligence officials may be attempting a back-channel communication with the United States to de-escalate the fighting.
Yesterday’s sell-mentality carried into Pac Rim trading where a 12.1% dive in the South Korean equity index, known as the Kospi, led broad-based losses that including drops of 3.6% in Japan, 4.4% in Taiwan, 4.5% in Indonesia, 2.1% in Singapore, 2.0% in Hong Kong, 1.9% in Australia, and 1.0% in China. But in Europe, equity markets are up over 1% in the euro area and even by 0.8% in London. U.S. futures had been initial in the red but are now showing gains of less than 1.0%.
The dollar has given back some of its earlier gains, with net losses of 0.8% against the peso, 0.7% versus the won, 0.4% relative to the kiwi, 0.3% against the yen, 0.2% vis-a-vis the euro and 0.1% against the Swiss franc, Australian dollar and sterling.
Bitcoin’s price is up 4.5%, whereas WTI oil is 0.6% softer. At about $74 per barrel, oil is just 10% above its end-February level, which is a much shallower response to a middle eastern war than seen in other instances such as after the Yom Kippur war of 1973, the Iranian revolution of 1979, or Iraq’s invasion of Kuwait in 1990. Gold and silver prices, which had fallen sharply yesterday, have climbed by 1.5% and 2.7% thus far today.
The 10-year U.S. Treasury yield and the 10-year German bund yield have stopped climbing, at least temporarily, while comparable sovereign debt yields are down today by four basis points in the U.K., two bps in Japan and Italy, and a basis point in Spain and Italy.
Composite and service-sector purchasing manager survey results, ADP’s estimate of private sector U.S. jobs growth, and an assortment of price statistics dominate today’s data menu, but market attention will be most highly focused upon war developments and the Federal Reserve Beige Book of regional economic conditions and expectations due at 15:00 EST.
The final estimate of Euroland’s composite purchasing managers survey index for February was left unrevised at 51.9, a 3-month high. The services sector index also printed at 51.9, a 2-month high. Evidence of higher cost inflation puts another nail in any hopes of a near-term cut in the European Central Bank’s policy interest rate, even though the data only depict a fairly tepid recovery due to continuing geopolitical risks. Germany had the bloc’s highest composite PMI score (a 4-month high of 53.2), which is a healthy sign, but France’s sub-50 reading of 49.9 and Spain’s 9-month low are concerning.
The official Chinese PMI readings compiled by NBS are disappointing: a 4-month manufacturing sector low of 49.0 and a 3-month low non-manufacturing index of 49.5. The privately compiled surveys depict a decidedly brighter picture, 33-month highs of 55.4 overall and 56.7 in the services sector.
India’s composite and services PMIs, a 58.9 overall reading and 58.1 in the services sector, remain high when compared to other economies, but those score were revised below initial estimates are represent 3- and 2-month lows.
Britain’s composite PMI of 53.7 was also revised down from the initial report but matched January’s 17-month high, with a services sector reading just 0.1 point under January’s 3-month high of 54.0.
Russia appears to have the military advantage in its war of attrition with Ukraine, but that conflict is exacting big economic costs. The Russian February services and composite PMIs printed at a 5-month low of 51.3 and a 2-month low of 50.8.
Australian composite and service sector PMIs were revised a bit higher but, at 52.4 and 52.8, were lower than in January. Australia’s construction purchasing managers index fell to a 3-month low.
A large 5.5-point drop in Sweden’s service sector PMI to 48.3 depressed the composite PMI of that economy to a 7-month low of 50.5.
Brazilian composite and service sector PMI reading remained above the 50 neutral level and, at 51.3 and 53.1, were at 2-month highs.
South Africa’s private sector PMI straddled the 50 level for a second straight month, depicting neither positive nor negative growth.
Lebanon’s manufacturing PMI rose to a 2-month high of 51.2, but that survey was taken before Lebanon got dragged into Iran’s war. Likewise, the United Arab Emirates non-oil PMI one-year high of 55.0 in February is likely to have a weaker reading this month.
Singapore’s private PMI score of 59.2 in February constitutes a 45-month high, while Hong Kong’s private PMI rose 3 points to a 35-month high of 55.3.
The recent contraction of Canada’s economy became less steep as its composite and service sector PMI rose closer to the 50 level of neutrality with readings of 47.1, a 4-month high, and 46.5, a 2-month high.
The S&P Global and ISM PMI surveys of the U.S. economy tell different tales. In the S&P Global survey, February readings were at 10-month lows of 51.9 overall and 51.7 in the services sector. The services PMI compiled by the Institute for Supply Management unexpectedly jumped 2.3 index points to its best score since April 2022. Sub-indices improved for orders, business activity, and employment, plus the measure of inflationary pressure lessened a bit.
Another piece of good U.S. economic news reported this morning was a higher-than-anticipated 63K estimate by ADP of private employment growth last month, which also exceeded January’s reading. Investors also learned of a third straight weekly increase in mortgage applications. Nevertheless, the combined rise in the past three weeks failed to fully reverse a steep slide in the prior three week even though the 30-year fixed mortgage rate of 6.09% is currently at its lowest level since the week of September 9, 2022.
Swiss CPI inflation was at 0.1% last month and has been 0.2% or lower since April.
Consumer confidence in Japan improved to an 82-month high last month but still wasn’t very strong.
Producer prices in the euro area were 2.1% lower than a year earlier in January, while the jobless rate of 6.1% was its lowest ever.
Brazilian PPI inflation printed at -4.3% in January.
Copyright 2026, Larry Greenberg. All rights reserved.
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