Market Quick Take - 14 March 2025

Market Quick Take - 14 March 2025

Market drivers and catalysts

• Equities: US stocks slump; tariffs escalate trade war; Intel surges, Adobe plunges; EU spirits stocks hit hard; China rallies on stimulus hopes
• Volatility: VIX rises but stabilizing; tariff uncertainty dominates; traders pricing in lower vol ahead
• Digital Assets: Bitcoin recovers $81,900; crypto stocks slide; JPMorgan sees mining shift to HPC
• Currencies: US dollar putting up some fight after recent weakening move as US government shutdown risks drop.
• Fixed Income: US and European yields ease lower after recent cycle highs.
• Commodities: Gold rally pauses ahead of $3000. Crude supported by Iran sanctions
• Macro events: University of Michigan Sentiment

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

Macro data and headlines

• Market risk sentiment improved overnight amid signs the US may avoid a shutdown after Democratic leader Chuck Schumer dropped a threat to block a key spending bill. Markets shook off the S&P 500’s entry into a correction, with China higher on optimism Beijing will announce support to boost consumption.
• President Trump threatened a 200% tariff on EU wine and alcoholic beverages in response to the EU's new 50% tariffs on US whiskey. Geopolitical tensions rose as Russia rejected the 30-day ceasefire accepted by Ukraine and supported by the US.
• US initial jobless claims fell by 2,000 to 220,000, below the expected 225,000, marking a three-week low. Recurring claims dropped by 27,000 to 1,870,000 in late February, under the anticipated 1,900,000. These figures indicate a tight labour market despite ongoing tightening.
• Eurozone industrial output rose by 0.8% in January 2025, surpassing the expected 0.6% and reversing December's 0.4% decline. Growth was driven by intermediate goods (up 1.6%) and capital goods (up 0.5%), while non-durable consumer goods (-3.1%), energy (-1.2%), and durable consumer goods (-0.2%) saw declines.
• US producer prices were flat, following a revised 0.6% rise and below the expected 0.3% gain, marking a seven-month low. Services prices fell 0.2%, led by a 1.4% drop in machinery and vehicle wholesaling margins. Declines were also seen in food and alcohol retailing, automobiles retailing, apparel, chemicals wholesaling, and real estate loans.

Macro calendar highlights (times in GMT)

1230 – Canada Jan. Manufacturing Sales
1400 – US March University of Michigan Sentiment and forward inflation expectations

Earnings events

• Today: BMW, Daimler Truck
  

Next week

• Wednesday: General Mills
• Thursday: Accenture, Nike, Micron, Fedex, Lennar, Hapag-Lloyd, Darden Restaurants
• Friday: Carnival Cruise

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

Equities

• US Markets: US stocks tumbled on Thursday, pushing the S&P 500 into correction territory (-1.39%) as renewed tariff threats from President Trump rattled markets. The Nasdaq 100 (-1.89%) and Dow (-1.3%) also saw sharp declines, with small caps (Russell 2000) nearing a bear market (-1.62%). Trump’s threat of a 200% tariff on European wines and spirits fueled trade war concerns, while softer-than-expected producer price inflation (PPI flat, core -0.1%) reinforced the previous day’s cooling CPI data. Adobe (-13.8%) plunged on weak revenue guidance, while Intel (+14.6%) soared on news of a new CEO.
• European Markets: European equities struggled as US tariff threats escalated trade war fears. The Stoxx 50 fell 0.9%, led by losses in Pernod Ricard (-4.12%) and Rémy Cointreau (-4.31%), hit by Trump’s proposed 200% tariff on EU alcoholic products. The DAX slid 1% as German truck stocks declined following the EPA’s reversal of Biden-era EV rules. Despite broad declines, Novo Nordisk (+5%) outperformed after an upgrade, and Allegro (+13.6%) surged on buyback plans. Auto stocks sank 1.6% as investors braced for EU-US tariff escalation.
• Asian Markets: Asian markets were mixed, with China rallying while broader sentiment remained cautious. The CSI 300 surged 2.6% to its highest level in months on expectations of new stimulus measures, including subsidies and consumer credit expansion. The Hang Seng gained 1.9%, led by tech stocks. Japan’s Nikkei (+0.4%) and TOPIX (+0.5%) advanced on a weaker yen. Meanwhile, South Korea’s KOSPI was flat, and Indonesia’s JCI dropped 1% amid sovereign debt concerns.

Volatility

The VIX rose to 24.66 (+1.77%) as markets remained on edge over trade tensions. While volatility remains elevated, VIX options volume showed signs of stabilization. The VVIX (volatility of VIX) dropped, suggesting traders see less extreme swings ahead. The tariff war remains the dominant risk driver, overshadowing softer inflation data. With no major economic releases scheduled, markets are set to remain headline-driven.

Digital Assets

Bitcoin rebounded above $81,900 (+1.05%) but faces resistance near $82,000. Ethereum (+1.32%) and Solana (+1.09%) followed suit, while crypto-linked stocks slid amid market turmoil. Coinbase (-7.43%) and Riot (-6.88%) declined, reflecting broader risk-off sentiment. JPMorgan flagged rising Bitcoin mining costs, highlighting Cipher Mining’s potential pivot to high-performance computing (HPC) as miners seek diversification.

Fixed Income

• US Treasury Yields dropped back after rising briefly to two-week highs yesterday as weak risk sentiment once again plagued the backdrop. The 10-year treasury benchmark dropped to 4.26% after a 4.35% high and trades 4.29% amidst brightening risk sentiment in the Asian session.
• European yieldsyesterday backed further off the cycle highs at the long end of the curve from Wednesday, when the German Bund yield hit a cycle high at 2.94%, falling to 2.86% yesterday, and the 2-year German Schatz yield closed at a new low for the week below 2.19%
• In credit markets, spreads have ratcheted wider in synch with the general deterioration in risk sentiment in US equities. A Bloomberg measure of the spread between high-yield corporates and US treasuries has widened from very low levels from November to February as lo as 267 basis points to the yesterday’s close at 335 basis points, with the spread widening some 22 basis points yesterday alone.

Commodities

• A major sector index trades close to flat on the week, with losses in energy—mostly due to natural gas—being offset by strong gains in precious and industrial metals. The agriculture sector trades mixed, with losses in grains being offset by softs, where sugar is having a strong week.
• Gold and silver extended their rallies, with gold hitting a fresh record just below USD 3,000, and silver reaching an October high near USD 34 before profit-taking emerged amid signs the US government may avoid a shutdown. Overall, both metals, and their miners, continue to benefit from investors seeking safer assets due to concerns about the economic impact of Trump's aggressive tariffs agenda. In addition, demand from central banks and inflows into ETFs continue.
• Crude oil trades higher as renewed sanctions on Iran and Russia offset a weak demand outlook and a planned production increase from OPEC+ next month. In the past four years, Iran and Venezuelan production has increased 1.6 million b/d, while the GCC members, led by Saudi Arabia and the UAE, have made voluntary cuts of the same magnitude.

Currencies

• Consolidation of the weak US dollar move continued in choppy fashion, with the big dollar perhaps firming on the signs that the Democrats in the US Senate will not step in to trigger a government shutdown this weekend. EURUSD rebounded yesterday from a local low near 1.0825, managing 1.0878 before retreating and slipping below 1.0840 in the Asian session.
• The JPY weakened again after trying to rally yesterday on the dip in global bond yields, with USDJPY back within striking distance of the highs of the week above 149.00 after yesterday’s sell-off to below 147.50 was rejected.