Market Quick Take - 13 March 2025

Market Quick Take - 13 March 2025

Market drivers and catalysts

• Equities: Tech rebound lifts US stocks; Nvidia, Tesla, Intel lead gains; trade tensions rise
• Volatility: VIX down sharply; options suggest relief rally may continue; Fed & PPI in focus
• Digital Assets: Bitcoin down; macro uncertainty weighs; Saylor’s Bitcoin strategy gains attention
• Currencies: JPY launches comeback again overnight, EUR strength eases back ahead of key German Bundestag session
• Fixed Income: Japanese yields plunge in late Asian
• Commodities: Copper surges on stockpile shift, gold near record, and crude steadies after rebound
• Macro events: Germany Bundestag reconvenes, EZ Industrial Production, US PPI and US Weekly Jobless Claims

The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.

Macro data and headlines

• Germany’s Bundestag will reconvene today to discuss the EUR 500 billion infrastructure initiative that chancellor in waiting Friedrich Merz has introduced, and new rules on defense spending, with both initiatives requiring changes to the constitutional “debt brake” rules that require a 66% vote in the Bundestag, meaning that all of the CDU/CSU bloc, SPD and Greens must agree, assuming the non-centrist parties reject the measures.
• US Democrats in the Senate moved to block a Republican measure that would prevent the Democrats from stopping progress of a government spending bill that would avoid a government shutdown on Saturday and keep the US government funded for six months. The Democrats are proposing a different bill that would only stretch funding until April 11.
• US headline CPI dropped to 2.8% from January's 3% YoY, while core CPI fell to 3.1% from January's 3.3% YoY, both below forecasts, marking the lowest since April 2021. However, while offering some relief from the run of discouraging indicators lately, it won't translate directly into a lower PCE price index - the Fed's preferred gauge of price pressures - because the cooling came mostly in services.
• Following Trump's 25% tariffs on US steel and aluminium imports, both the EU and Canada retaliated by imposing a 25% tariff on US-made products. Canada targeted goods worth $20 billion while the EU tariffed goods worth EUR 26 billion, matching previous tariffs on US goods. Trump said that he would retaliate against the EU retaliations, though cited no specifics.
• The Bank of Canada cut its key interest rate by 25bps to 2.75%, marking 225bps in cuts since June 2024. The economy grew more than expected in Q4, aided by earlier rate cuts, but growth is expected to slow due to rising trade conflict with the US.

Macro calendar highlights (times in GMT)

Germany’s Bundestag reconvenes today to discuss infrastructure and spending initiatives

0900 – IEA's Monthly Oil Market Report
1000 – Eurozone Jan Industrial Production
1230 – US Feb PPI
1230 – US Weekly Jobless Claims
1430 – EIA Natural Gas Storage Change

ECB Speakers today: Rehn (0900), Guindos (0915), Vujcic, Makhlouf (1000), Holzmann (1600), Villeroy, Nagel (1730), Escriva (2100)

Earnings events

• Today: Docusign
• Friday: BMW, Daimler Truck

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• US: US equities closed mixed as softer inflation data boosted tech, while trade tensions weighed on broader sentiment. The S&P 500 gained 0.49%, led by Nvidia (+6.4%), Tesla (+7.6%), and Palantir (+7.2%), while the Nasdaq 100 surged 1.1%. Intel soared 10% after appointing Lip-Bu Tan as CEO. However, the Dow slipped 0.2%, dragged by Walmart (-2.6%). Market optimism over rate cuts was tempered by Trump’s 25% steel and aluminum tariffs, triggering EU and Canadian retaliation. Investors await next week’s Fed meeting for further guidance.
• Europe: European markets rebounded, with the DAX up 1.56% and STOXX 50 gaining 0.93%, lifted by cooler US CPI data and Ukraine ceasefire optimism. Defense stocks outperformed, led by Rheinmetall (+9.3%), Siemens Energy (+9%), and Safran (+5%). Trade tensions escalated as the EU imposed €26B in retaliatory tariffs on US goods. Puma (-20%) tumbled on weak guidance, while Porsche (-0.8%) fell after reporting lower sales and profits. The CAC 40 rose 0.6%, with industrials and financials leading, but LVMH (-1.4%) and Sanofi (-1.9%) lagged.
• Asia: Asian equities were mixed as trade war fears and China’s economic concerns offset gains in tech stocks. Japan’s Nikkei rose 1%, following Wall Street’s lead, while South Korea’s KOSPI added 0.5%, driven by Samsung (+1.09%) and SK Hynix (+2.06%). However, Hong Kong’s Hang Seng fell 0.8%, with tech stocks slumping. Alibaba (-2.7%) and Tencent (-1.4%) led losses as concerns over China’s deflation risks resurfaced. Investors remain wary of Trump’s escalating tariffs on EU goods and their impact on Asian exports.

Volatility

Volatility dropped significantly, with the VIX down to 24.23 (-2.69) and VVIX plunging 10.5%. The Skew Index, a measure of tail-risk hedging, hit its lowest level since August. VIX futures rose slightly, signaling some lingering uncertainty over tariffs and Fed policy. Equity options suggest the relief rally may continue, with major resistance at S&P 5,700. The JPM collar at 5,565-5,500 is slowing selloffs, as dealer hedging creates a pinning effect. Upcoming PPI data and jobless claims could further impact volatility.

Digital Assets

Bitcoin slipped 0.6% to $83,151, underperforming equities despite cooling US inflation. Ethereum fell 1.9% to $1,871, while Solana dropped 2.4%. Crypto markets remain cautious as Trump’s trade war escalation fuels global economic uncertainty. Meanwhile, Michael Saylor’s Bitcoin reserve strategy gained traction, estimating a potential $106T economic impact. Crypto-related stocks showed mixed performance: Coinbase (+0.02%), MicroStrategy (+0.75%), Riot (+1.68%), while MARA Holdings (-1.58%) fell. Investors await PPI data and Fed guidance for macro cues.

Fixed Income

• Japanese 10-year government bond futures dropped to their lowest level since November 2009 after Ueda told the country’s parliament that he expects real wages and consumer spending to improve as import inflation subsides while robust wage gains continue.
• US treasury yields dipped overnight after rising yesterday despite the softer than expected February CPI data. Market risk sentiment is likely partly to blame. A 10-year US treasury auction drew solid demand, and a 30-year T-bond auction is up today. The 10-year treasury benchmark trades at 4.29%, while the 2-year yield has softened after finding resistance at 4%.

Commodities

• Gold traded near USD 2950 overnight amid renewed risk off tone across stock markets, and after cooler US inflation data and economic growth concerns supported fresh Fed rate-cut hopes.
• Copper prices in New York trades 9% above international prices amid an ongoing rush to ship metals to the USA ahead of tariffs, a move that is depleting global available stock levels, thereby underpinning prices globally, in the process also supporting silver which recorded its highest close on Wednesday since October at USD 33.25
• Crude trades steady following a two-day run of gains, supported by robust US gasoline, and the prospect of renewed Iran sanctions more than offsetting planned increases from OPEC+ starting next month. Ahead of IEA’s monthly outlook, OPEC maintained their global demand growth forecasts.

Currencies

• The Canadian dollar advanced following the Bank of Canada's expected quarter-point rate cut, with the bank emphasising risks to the outlook stemming from US tariff risks. USDCAD fell 0.5% to 1.4359, with the loonie leading G-10 gains, but rebounded to near 1.4400 as risk sentiment faltered overnight. The Bank of Canada noted, "Heightened trade tensions and tariffs imposed by the United States will likely slow economic activity and increase inflationary pressures in Canada."
• USDJPY saw renewed weakness following a two-day correction with the JPY strengthening after the Bank of Japan Governor Kazuo Ueda showed little concern over rising bond yields, saying he expects real wages to improve. The Trump administration yesterday railed against Japan’s “700% rice tariff”.
• EURUSD fell from a five-month high back below 1.0900 after the European Commission launched countermeasures against US tariffs on EU steel and aluminium and Trump in turn said he would retaliate further, though not citing specifics. Trump also weighed in against Ireland’s. A key session for the reconvened German Bundestag kicks off today, as noted above.