Market Quick Take – 9 April 2025

• Equities: Tariffs active, sharp declines, healthcare up, EU retaliation looming
• Volatility: VIX above 52, VVIX spikes, extreme hedging activity
• Digital Assets: BTC/ETH sharply lower, mining sector disrupted, tariffs reshape crypto outlook
• Currencies: USDCNH breaks above 7.375 level for first time since CNH began trading.JPY, EUR and CHF surge against the US dollar
• Fixed Income: US treasury market stability concerns as long rates surge
• Commodities: Gold jumps on US stability concerns, crude slumps
• Macro events: FOMC minutes, US Treasury auctions 10-year note

Macro data and headlines

• Trump's 104% tariffs on China start Wednesday, raising global economic concerns. Beijing vows to resist, while investors fear recession impacts. Chicago Fed President Austan Goolsbee stresses careful economic data assessment before policy decisions.
• An EU spokesperson stated that the situation remains unchanged, with the EU aiming to avoid tariffs and awaiting meaningful engagement from the US. The EU plans to present a response to new tariffs early next week and is prepared for discussions.
• Canada's Ivey PMI dropped to 51.3 in March from February's 55.3, missing the forecast of 53.2. It remained above the expansion threshold, recovering from January's low of 47.1, supported by inventory growth (53.0 vs 49.4).
• The worsening trade war has raised concerns about a US recession, with economists at JPMorgan and Goldman Sachs increasing the probability of a recession, and investors fearing a deeper crisis of confidence.

Macro calendar highlights (times in GMT)

1100 – US Mortgage Applications
1430 – EIA's Weekly Crude and Fuel Stock Report
1700 – US to sell USD 39 billion 10-year Notes
1800 – FOMC Meeting Minutes

Earnings events

• Today: Delta Airlines
• Thursday: Tesco, Progressive Corporation
• Friday: JP Morgan, Wells Fargo, Morgan Stanley, Blackrock, Bank of New York Mellon, Fastenal

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

Equities

• US: US equities slumped Tuesday amid escalating trade tensions as Trump's new tariffs, totaling 104% on Chinese imports, took effect today. The Dow fell 0.84%, S&P 500 dropped 1.57% to 4,982.77, marking its largest four-day loss since March 2020. Nasdaq lost 2.15%. Investors initially optimistic about negotiations reversed course after tariffs were confirmed as "non-negotiable." Healthcare stocks, including Humana (+10.7%), CVS (+5.9%), and UnitedHealth (+5.4%) outperformed, benefiting from Medicare payment increases. Apple and Meta faced EU regulatory concerns, declining significantly (-5% and -1.1%, respectively).
• Europe: European markets rebounded Tuesday, breaking a four-day losing streak driven by tariff fears. The STOXX 600 rose 2.7%—its best performance since 2022. However, futures sharply reversed on Wednesday, down about 4%, as Trump's 20% tariffs on EU imports commenced. The EU plans retaliatory tariffs up to 25% on US goods. Corporate highlights included Infineon's gain on its $2.5 billion Marvell acquisition. Analysts project a Q1 earnings decline of 2.2%, reflecting the tariff turmoil.
• UK: The FTSE 100 climbed 2.71% on Tuesday, marking its largest one-day gain since March 2022. Gains led by Hiscox (+6%), Rolls-Royce (+5.95%), and M&G (+5.73%). However, UK futures dropped over 3% Wednesday as tariffs hit, prompting crisis talks among financial leaders.
• Asia: Asian equities faced renewed pressure Wednesday as US tariffs heightened economic fears. Hong Kong's Hang Seng fell 2.4%, led by WH Group (-10%) and ZTO Express (-7.7%). China's CSI300 stabilized (+0.3%) amid state intervention, notably in semiconductor and AI stocks. Japan’s Nikkei slumped 3%, and South Korea’s KOSPI entered bear market territory, down 20% from its July 2024 high.

Volatility

Volatility surged sharply as tariff fears intensified. VIX jumped 11.39% to close at 52.33 on Tuesday, the highest since April 2020, reflecting deep market anxiety. VVIX spiked to 170, indicating elevated demand for volatility hedges. Futures indicated further turbulence, with S&P 500 futures down 2%, Nasdaq futures down 1.94%, and European indices futures sharply lower.

Digital Assets

Cryptocurrencies fell amid tariff-induced risk aversion. Bitcoin dropped 5.6% to approximately $75,523 early Wednesday, Ethereum slid nearly 11% to $1,417. Crypto miners saw potential benefit outside the US as rig prices rose domestically due to tariffs. MicroStrategy stock plunged 11.3% on Tuesday amid concerns over unrealized Bitcoin losses.

Fixed Income

• US treasuries sold off for a third straight day, with the 10-year benchmark yield hitting 4.5% overnight, alarming as the ultimate safe haven remains under pressure from US fiscal concerns and risks of foreigners dumping bonds in retaliation to tariffs. The 2s-10s meanwhile has steepened to a two-year high, currently at 65 bps after hitting 74 bps earlier, raising the refunding cost of US massive debt pile.
• Treasury yields rose after Trump slapped an additional and unsustainable tariff on China and deepened following a poorly received sale of USD 58 billion 3-year notes. Direct bidders bought only 6.2%, the lowest percentage in five years. (Worth noting that this is the category into which China and Japan are)
• The basis trade, a strategy used by hedge funds to wager on the difference between cash treasuries and futures prices, may be unwinding, causing yields to surge and potentially leading to a cascading effect in the treasury market.
• The US Treasury will auction USD 39 billion in 10-year notes today and is set to auction USD 22 billion in 30-year treasury notes tomorrow.

Commodities

• Crude prices slumped to a four-year low with focus squarely on the escalating global trade war and its potential negative impact on growth and demand for energy. Brent trades near USD 60 with WTI around USD 57, with the forward curve trading in contango from October and onwards.
• Gold fell back below USD 3,000 on Tuesday as US Treasury yields rose, only to reverse sharply higher as the global trade war worsened and the realisation that US yields are rising on fiscal debt concerns which ultimately may prove to be gold supportive.
• Just like crude, other pro-cyclical commodities, especially industrial metals suffered amid worries about recession and lower demand,

Currencies

• The USD tumbled after the White House confirmed a 104% tariff would be slapped on Chinese imports. The weakness which benefitted JPY, EUR, CHF and gold the most occurred while Treasury yields rose, highlighting the USD is losing is yield-based support as investors accelerate a search for diversification beyond the US
• DXY declined to 102.27, JPY rose to a six-month high as USDJPY slumped to 145, while EUR rose back above 1.10
• USDCNH surged past 7.375, a level that up until now had been supported, reaching a record high at 7.42 following the White House's announcement that the 104% China tariff will be enforced.