Market Quick Take – 27 June 2025

Market drivers and catalysts

• Equities: US tech, banks rally; defense stocks surge; tariff risks ease
• Volatility: VIX drops; stable environment; watch for sudden shifts
• Digital assets: BTC steady; IBIT/ETHA inflows; crypto ETFs expand; mining sector consolidates
• Fixed Income: US yields soften on persistent Fed Chair speculation
• Currencies: USD consolidates after hitting three-year low
• Commodities: Steep weekly loss led by energy, grains and tired-looking gold
• Macro events: Eurozone Jun. Confidence Surveys & US May PCE Inflation

Macro data and headlines

• The US economy contracted by 0.5% in Q1 2025, the first decline in three years, driven by reduced consumer spending and exports. Consumer spending rose 0.5%, the slowest since 2020, and exports grew 0.4%.
• According to Reuters, Trump announced signing a deal with China on Wednesday and mentioned a potential upcoming deal with India, adding that China is beginning to open up.
• Core consumer prices in Tokyo's Ku-area increased by 3.1% in June 2025, down from 3.6% in May and below the expected 3.3%. This is the first slowdown since February, but still above the Bank of Japan's 2% target.
• Japan's retail sales grew by 2.2% in May 2025, below the expected 2.7% and slower than April's revised 3.5%. This marked the 38th consecutive month of growth, supported by rising wages.
• Japan's unemployment rate remained at 2.5% in May 2025 for the third month, meeting expectations. Unemployment dropped by 40,000 to 1.72 million, while employment increased by 33,000 to a record 68.37 million.
• Spain's Prime Minister Pedro Sanchez risks a backlash from the Trump administration for opting out of the NATO commitment by European members signed this week to raise defense spending to 5% of GDP. Trump said that Spain was trying to get a "free ride" and would pay twice the tariff rates of other EU countries, theoretically not possible to enforce if the US strikes a deal with the EU as a whole.

Macro calendar highlights (times in GMT)

0645 - France flash Jun. CPI
0700 - Spain flash Jun. CPI
0900 - Eurozone Jun. Confidence Surveys
1230 - Canada Apr. GDP
1230 - US May PCE Inflation
1400 - US Jun. Final University of Michigan Confidence

Earnings events

• Tuesday - Constellation brands

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

Equities

• US: US stocks pushed higher, with the S&P 500 gaining 0.8% to close at a record 6,141, while the Nasdaq advanced nearly 1%. Optimism grew on expectations for up to three Fed rate cuts this year, reinforced by mixed economic data and continued cooling inflation. Tech and bank shares led, with JPMorgan and Goldman Sachs hitting new highs after the Fed proposed easing leverage rules. Tariff worries faded as the White House signaled flexibility on deadlines, and speculation intensified about President Trump nominating a new Fed chair before year-end.
• Europe: European markets ended mixed as investors balanced upbeat US tech momentum, defense-sector rallies, and ongoing tariff talks. Germany’s DAX outperformed (+0.64%), powered by defense and industrial names like Rheinmetall (+7.3%) and Airbus. France’s CAC 40 was flat as defense gains offset retail weakness. UK’s FTSE 100 rose 0.19%, lifted by mining and oil stocks, with BAE Systems up nearly 4% on NATO’s increased spending pledge. Despite strong sector moves, subdued consumer sentiment and looming US-EU trade deadlines kept a lid on overall gains.
• UK: The FTSE 100 edged up 0.19% to 8,735, as miners (Anglo American +7%) and defense (BAE Systems +3.8%) benefited from higher commodity prices and NATO’s 5% GDP defense target. Exporters lagged on pound strength. Retail sentiment remained weak, extending a nine-month decline. Shell and BP rose, with Shell denying BP takeover rumors. Investors focused on the Israel-Iran ceasefire and upcoming US-EU tariff deadlines, keeping broader sentiment cautious.
• Asia: Asian markets mostly climbed, led by Japan’s Nikkei, up 1.6% to a five-month high as tech stocks rallied and inflation softened, reducing pressure for rate hikes. Chinese and Hong Kong shares were steadier but on track for strong weekly gains, helped by optimism over a US-China rare earths deal and a holding Israel-Iran truce. South Korea’s KOSPI slipped on profit-taking after recent rallies. Across the region, investors remained watchful ahead of the July 9 US tariff deadline.

Volatility

Market volatility continues to drop, with the VIX—Wall Street’s fear gauge—back near levels last seen before Middle East tensions. This calmer backdrop has helped stock markets grind higher, giving investors more confidence to stay invested. For long-term investors, this means a more stable environment to build or hold positions. But it’s also a good reminder: periods of calm don’t last forever, so staying diversified and prepared remains key.

Digital Assets

Bitcoin is steady near $107,500, while Ether holds around $2,437. Institutional demand remains strong: BlackRock’s IBIT ETF stays active, holding over $70 billion in assets, while ETHA, though down 27% year-to-date, continues to attract inflows. Recent court decisions kept Ripple in the spotlight, while Invesco became the ninth firm to file for a spot Solana ETF, reflecting ongoing expansion in the crypto ETF space. Big players like Tether and Hut 8 are scaling up bitcoin mining, shifting the landscape toward larger, more centralized operators.

Fixed Income

• US Treasury yields fell yesterday all along the curve before bouncing back slightly in the overnight session, with the 10-year treasury yield benchmark at 4.26% after a seven-week low of 4.24% yesterday. The 2-year benchmark, so heavily impacted yesterday by speculation that Trump would be very early to nominate a dovish Fed Chair to replace Fed Chair Powell next May bounced back to 3.74% after trading as low as 3.71% yesterday.
• Japanese government bond yields rose despite June Tokyo CPI data showing slightly softer than expected headline- and core CPI data. The two-year JGB benchmark yield rose a basis point to trade above 0.74%, while the 10-year benchmark also rose slightly to 1.43%.

Commodities

• Following a strong month, the Bloomberg Commodities Index reversed sharply lower this week, losing around 4%, driven by energy weakness (-9.7%) as the Middle East risk premium collapsed, while crop-supportive weather weighed on the grains sector (-5.2%), and an ongoing correction in tired-looking gold (-2.2%). Partly offsetting these was a strong week across the industrial metal sector, led by a tight supply-led squeeze in copper (+4.8%).
• Gold’s inability to respond to bullion-friendly news, such as this week's dollar and yield decline, highlights a market that remains in consolidation mode, raising the risk of a deeper correction amid a broad risk-on sentiment as the Middle East ceasefire holds and traders focus on the prospect of US trade deals with China and ten major trading partners. Gold weakness curbs further advancement for high-flying silver and platinum, both losing ground in early Friday trading.

Currencies

• The US dollar consolidated some of yesterday's losses, with the EURUSD back below 1.1700 overnight after posting an intraday high yesterday of 1.1744. USDJPY bounced back to as high as 144.80 overnight after posting a 143.75 intraday low yesterday, trading 144.50 this morning.
• The Canadian dollar was one of the strongest currencies yesterday, with USDCAD swooning all the way to a 1.3618 low before rebounding toward 1.3650. The strength may be on signs of stronger fiscal spending from the new government under Mark Carney, who is grappling with a weaker economy due to Trump tariffs. Yesterday's Canada's parliamentary budget officers asked for Carney to provide an update of the government's finances, and Carney fast-tracked a bill to speed up a number of major energy infrastructure and mining projects that will soon become law.

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