China’s prices fall for first time in 13 months

Good morning. Here's what happened overnight and what you need to know today.

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1.

Deflationary pressures: China’s Consumer Price Index (CPI) fell further than expected in February, turning negative for the first time in 13 months. The CPI declined 0.7%, lower than the predicted 0.4%, signalling that deflationary pressures are persisting in the economy. The National Bureau of Statistics (NBS) attributed lower monthly spending to an earlier than usual lunar new year holiday, as prices usually rise during the holiday as consumers spend on food and travel. The NBS estimated that prices rose 0.1% when adjusted for the earlier holiday date. Lower food costs also impacted the price decline for February, as an increased supply of fresh vegetables brought on by warm weather saw fresh produce prices fall by 12.6%. China’s core CPI which excludes items including food and energy, contracted for the first time since 2021, falling 0.1%, marking only the second time the gauge has contracted in more than 15 years. (China National Bureau of Statistics)(Bloomberg)(Capital Brief)

2.

Alfred’s impact: Around 240,000 homes and businesses remain without power in QLD, while warnings for severe thunderstorms across South East QLD prompted the Logan and Gold Coast councils to issue ‘too dangerous to leave’ emergency alerts. Despite cyclone Alfred being downgraded to a tropical low, authorities warn that the danger is far from over. Prime Minister Anthony Albanese said: "The situation in Queensland and northern New South Wales remains very serious due to flash flooding and heavy winds,” and that heavy rainfall, damaging wind gusts and coastal surf impacts are expected to continue. The body of a 61-year-old man who went missing on Friday after his car was caught in floodwaters in Dorrigo, NSW has been recovered. Two members of the Australian Defence Force (ADF) remain in a critical condition after an accident near Lismore on Saturday saw two ADF vehicles crash on route to rescue and recovery efforts. (ABC)(The Australian)

3.

Red redemption: Labor secured a third-term in what has been dubbed an ‘historic’ win for the party in Western Australia and for Roger Cook, who won his first election as premier on Saturday. The landslide victory saw Labor win 41 seats, compared to just five for the opposition Liberal party. The Nationals secured four seats and nine remain undecided. Labor has not won three consecutive elections in the state since the 1980s. Liberal shadow energy spokesman Steve Thomas said "massive change is required within the Liberal Party just to be able to progress and be competitive going forward and that process needs to start immediately.” The Liberal party had expected to win 10 seats. The Western Australian Electoral Commission has also said it will launch an investigation into issues that arose on election day, including a shortage of ballot paper and long queues at voting centres. (ABC)

4.

Taxing steel: US tariffs of 25% on steel and aluminium imports will take effect as scheduled on Wednesday, Commerce Secretary Howard Lutnick said, while President Donald Trump is holding firm on fentanyl-related tariffs on Mexico, Canada, and China. Last week, Trump imposed 25% tariffs on Mexico and Canada, then exempted USMCA imports for a month. The exemptions expire on 2 April, when Trump has threatened reciprocal tariffs on all trading partners. Democrats criticised the on-again, off-again tariffs as chaotic. Lutnick also dismissed concerns that Trump’s global tariffs would trigger a US recession, stating, “Absolutely not. There's going to be no recession in America.” Meanwhile, Trump said he expects Ukrainian President Volodymyr Zelenskiy to “come around” on a natural-resources deal with the US, accusing him of “taking candy from a baby” by maximising US military aid under Biden and being ungrateful. (Reuters)(Bloomberg)

5.

NATO target: Elon Musk has voiced support for the United States leaving NATO, posting on X that it “doesn’t make sense for America to pay for the defense of Europe.” He reposted a message from Senator Mike Lee calling to “Exit NATO now!” and added, “We really should.” Earlier this month, Musk also backed a suggestion that the US should leave both NATO and the United Nations. His comments come as the future of NATO hangs in the balance, with Trump recalibrating US engagement with NATO and European leaders scramble to boost defence budgets. The EU is considering up to €150 billion in defence loans and allowing €650 billion in spending over four years. Trump has said NATO members who “don’t pay” will not be defended. Under US law, a president cannot unilaterally withdraw from NATO without Senate approval or an act of Congress. (Bloomberg)(Newsweek)

6.

Carney’s call: Canada will announce its next prime minister on Sunday as the country faces a trade war with US President Donald Trump. The governing Liberal Party is set to choose a new leader to replace Prime Minister Justin Trudeau, who announced his resignation in January but remains in office until a successor is sworn in. Former central bank governor Mark Carney is the frontrunner over former finance minister Chrystia Freeland. Around 400,000 Liberal members were eligible to vote, with results expected at 6:30 pm in Ottawa (9:00am AEDT). The new prime minister is expected to call a general election, which must be held by October. Trump’s tariffs and sovereignty threats have fuelled a surge in Canadian nationalism, improving the Liberals’ polling numbers. Carney has pledged economic reforms, including a major housing plan. Meanwhile, China slapped USD2.6 billion in tariffs on Canadian agriculture, hitting back at Ottawa’s trade barriers in a trade war shaped by US economic pressure. (FT)(NYT)

7.

Ukraine squeezed: Russian forces recaptured three more settlements in Russia’s Kursk region as part of an operation to oust Ukrainian troops, seven months after Kyiv’s cross-border incursion seized 1,300 square km. Russian special forces crept for miles through a gas pipeline near Sudzha and attacked Ukrainian units from the rear, according to Ukraine’s military and Russian war bloggers. Ukraine’s General Staff confirmed the pipeline operation but said Russian troops were “detected in a timely manner” and struck with rockets, artillery and drones. Open-source maps showed Ukrainian forces nearly encircled. Meanwhile, US Secretary of State Marco Rubio accused Poland’s Foreign Minister Radoslaw Sikorski of “making things up” after Sikorski suggested Ukraine might need an alternative to Starlink if Elon Musk were to turn off the service. Rubio said, "No-one has made any threats about cutting Ukraine off from Starlink." Musk said in a post on X that Ukraine’s “entire front line would collapse if I turned it (Starlink) off”. (Reuters)(AP)

8.

Rail rivals: The Virgin Group is seeking to raise £700 million ($1.4 billion) to launch a cross-channel rail service that would compete with Eurostar as early as 2029, according to a report by the Financial Times. Virgin plans to raise £300 million in equity and £400 million in debt and intends to be a cornerstone equity investor in the project. The project would be the first direct rival to Eurostar’s 30 year-old network, operating high-frequency services connecting London with Paris, Brussels and Amsterdam. Several operators are weighing launching a cross-Channel service, but bids for the project are being held up by a dispute over access to an east London train depot. The depot is the only place where high-speed cross-Channel trains can be parked and maintained in the UK. As Eurostar says that the depot is effectively full, would-be rivals including Virgin have appealed to the regulator to intervene and grant access. (FT)(Capital Brief)