Market Quick Take – 24 June 2025

Market drivers and catalysts

• Equities: US rebounds, tech leads, Europe mixed, Asia rallies on ceasefire
• Volatility: VIX retreats, hedging cheaper, focus on PCE and Powell
• Digital assets: Bitcoin rebounds, ETHA sees outflows, IBIT stable, risk-on tone
• Fixed Income: US treasuries rally on Fed comments, oil price swoon
• Currencies: USD bear returns with a vengeance as another Fed official mention of July rate cut
• Commodities: Crude tanks as geopolitical risks subside
• Macro events: Fed's Powell Delivers Semi-annual Policy Testimony

Macro data and headlines

• Crude prices slumped and risk sentiment improved after Iran appeared to opt for a mostly symbolic response to the US bombing by flagging in advance a limited strike on a US base in Qatar caused no casualties, and after Trump announced a ceasefire timeline for "The 12-Day War" between Israel and Iran.
• Fed's Bowman, echoing Waller, suggested a divide among FOMC members and is open to a July rate cut if inflation remains contained. She emphasized focusing on job market risks and noted minimal impacts from trade policy on inflation. Bowman is the second Governor to signal a willingness for a July cut.
• S&P Global US Composite PMI fell slightly to 52.8 in June from 53 in May, indicating a mild cooling in private sector growth but marking the 29th month of expansion. Service sector output eased to 53.1, while manufacturing remained steady at a 15-month high of 52.0.US existing home sales increased by 0.8% in May 2025 to an annualised rate of 4.03 million, rebounding from a 0.5% decline the previous month and surpassing market expectations of 3.96 million units.
• US existing home sales increased by 0.8% in May 2025 to an annualised rate of 4.03 million, rebounding from a 0.5% decline the previous month and surpassing market expectations of 3.96 million units.

Macro calendar highlights (times in GMT)

0800 – Germany June IFO Survey
1230 – Canada May CPI
1400 – Fed's Powell Delivers Semi-annual Policy Testimony before House committee
Fed speakers: Hammock, Williams
ECB speakers: Greene, Guindos, Kazimir, Lagarde, Lane

Earnings events

• Today: Fedex, Carnival Corporation
• Wednesday: Micron Technology, Paychex, Alimentation Couche-tard, General Mills
• Thursday: Nike, Hennes & Mauritz

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

Equities

• US: US stocks rose Monday as easing geopolitical risk and hopes for Fed rate cuts drove gains. The S&P 500 (+0.96%), Nasdaq (+0.94%), and Dow (+0.89%) rebounded after Iran’s limited missile response to US airstrikes calmed oil markets, pushing crude down over 7%. Tech stocks led, with Tesla soaring 8.2% on its robotaxi debut and AMD up 1% on a broker upgrade. Investors look ahead to Fed Chair Powell’s testimony and Thursday’s PCE inflation report as rate-cut expectations firm for September.
• Europe: European markets were mixed Monday as traders monitored US-Iran developments and incoming business data. The DAX fell 0.4% to 23,269, with defensive names outperforming and German defense stocks retreating. A surprise uptick in Germany’s June PMI signaled private-sector growth, but the CAC 40 dropped 0.7% amid ongoing concerns over the Middle East conflict and softening French economic activity. Swiss stocks were also down, led by Holcim’s post-spinoff slump.
• UK: London’s FTSE 100 closed down 0.2% as investors stayed cautious following US strikes on Iran and tepid domestic business growth. Energy stocks like BP and Shell held up as crude slid, while travel shares lagged. June’s UK PMI showed private-sector resilience, with output above forecasts but growth still sluggish. The pound edged higher as traders eyed potential Bank of England rate cuts in August.
• Asia: Asian equities surged on tentative ceasefire news, with South Korea’s KOSPI (+2.8%), Hong Kong’s Hang Seng (+1.7%), and Japan’s Nikkei (+1.2%) all higher. The rally was supported by a risk-on mood after Trump’s announcement of a 12-day Israel-Iran truce and strong US futures. Mainland China’s CSI 300 rose 1.1% to a three-month high, led by tech and carmakers. Investors await details on China’s legislative meeting and further Fed signals.

Volatility

Volatility eased Monday as geopolitical fears subsided and markets regained confidence. The VIX dropped to 19.83 (-3.8%), down from last week’s highs, while short-term indicators like VIX1D also retreated sharply. Demand for near-term index option hedges has fallen, reflecting a more stable outlook ahead of Thursday’s PCE inflation release and quarter-end portfolio moves. Hedging costs are now lower for long-term investors, though implied volatility remains above last year’s lows.

Digital Assets

Crypto assets surged with risk markets as ceasefire news spurred renewed buying. Bitcoin jumped over 4% to $105,500, fully recovering from last week’s dip. Ethereum rallied sharply, up 8.8% to $2,420, though it still lags BTC year-to-date. Flows highlight the difference in institutional demand: BlackRock’s IBIT held at $58.67 after over $1 billion in inflows last week, while ETHA slipped 4% after posting its first net outflow. Altcoins also rebounded, with XRP, Solana, and Cardano all rising more than 8% on the day.

Fixed Income

• US Treasuries rallied hard as crude oil prices swooned on hopes for an end to the Iran-Israel confrontation, which took the bite out of forward inflation fears, and as the Fed’s Michelle Bowman, the Fed Vice Chair for Supervision and a voter at FOMC meetings, indicated she is open to a rate cut in July, although odds for a rate cut at that meeting are still only around 23%. The 2-year US treasury benchmark dropped about five basis points yesterday and trades 3.85% this morning, while the 10-year benchmark fell to new lows briefly yesterday before rebounding, trading 4.33% this morning.
• Japanese government bond yields were choppy as the finance ministry auctioned fewer 20-year bonds than at previous auctions overnight. The bid-to-cover ratio at the auction was 3.11, slightly lower than the average over the last year. Yields were steady, with the 10-year JGB benchmark trading a few basis points higher during the session only to settle a single basis point higher at 1.42%.

Commodities

• Crude prices slumped after Iran’s military response to the US weekend bombing was seen as mostly symbolic, potentially signalling a wish to de-escalate the 12-day war with Israel. The USD 13 top-to-bottom tumble in Brent from above USD 80 to below USD 70 removed the build-up risk premium amid eased concerns about supply disruption, allowing markets to return their focus to an oversupplied market into the autumn and winter months.
• Gold retreated as haven demand ebbed after Trump said Israel and Iran had agreed to a ceasefire, partly offset by support from renewed dollar weakness and easing energy-related inflation concerns, potentially allowing the Fed to cut rates sooner than expected.

Currencies

• The US dollar sold off broadly yesterday, sparked by comments from the Fed’s Michelle Bowman that she is open to a rate cut should inflation remain subdued. EURUSD soared all the way back above 1.1600 overnight after a low yesterday just above 1.1450. US Fed Chair Powell will face a political test today in his semi-annual testimony, today before the House Financial Services Committee and tomorrow before a Senate committee.
• USDJPY lurched into an epic reversal on the combination of Fed comments and broad rally in US treasuries that lowered US yields, and as the swoon in crude oil prices lowers inflation risks, which have weighed on the yen due to the country’s very negative real interest rates. USDJPY finds itself this morning below 145.30 after peaking just above 148.00 yesterday.

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