Market Quick Take - 11 March 2025

Market Quick Take - 11 March 2025

Market drivers and catalysts

• Equities: US sell-off deepens; S&P 500 -2.7%, Nasdaq -3.9%; mega-cap tech tumbles; EU stocks drop; auto, defense sectors outperform
• Volatility: VIX surges 16% to 27.98; 0DTE options heat up; Fed rate cut expectations shift
• Digital Assets: Bitcoin -2.4%; Ethereum -8%; crypto stocks fall; MicroStrategy's capital raise fails to boost sentiment
• Currencies: Currency moves muted relative to nervous markets elsewhere. USDJPY hit new cycle lows yet again overnight, but rebounded.
• Fixed Income: Global yields drop further overnight but rebound off lows as risk sentiment bounces.
• Commodities: Broad weakness extend to crude, gold and copper. Grains await key report
• Macro events: US Jan JOLTS Job Openings

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

Macro data and headlines

• Markets traded sharply lower on Monday and followed through lower still overnight until bouncing strongly in Asian hours. President Trump in a recent interview said he did not rule out a recession due to tariff changes, calling the economy a “period of transition.” Fed Chair Powell noted rising uncertainty. Investors are focused on CPI and PPI data ahead of the FOMC meeting next week. Recent data shows concerns, with the jobs report indicating a weakening labor market and the full impact of DOGE cuts yet to be seen.
• The NY Fed 1-year inflation expectations rose for a fourth month in February to 3.13% reaching the highest level since May.
• Germany's Green party rejected a debt-financed package for defense and infrastructure spending, blasting the prospective ruling coalition's decision to leave them largely out of discussions and ignoring their priorities, but left the door open to further talks. Merz's team still sees scope for a last-minute agreement, and officials from the CDU and SPD believe a deal could be made this week.

Macro calendar highlights (times in GMT)

1400 – US Jan JOLTS Job Openings
1600 – EIA's Short-term Energy Outlook
1600 – USDA's World Agricultural Supply and Demand Estimates (WASDE)

CeraWeek Energy Conference in Houston

Earnings events

• Today: Volkswagen, Viking Holdings
• Wednesday: Adobe, Inditex, Rheinmetall, Lennar
• Thursday: Docusign
• Friday: BMW, Daimler Truck

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

Equities

• US: US stocks plunged Monday as trade war fears and recession concerns triggered a broad sell-off. The S&P 500 dropped 2.7%, the Nasdaq 100 fell 3.9%, and the Dow lost 2.08%. Mega-cap tech stocks were hit hard, with Tesla (-15.4%), Nvidia (-5.1%), and Meta (-4.4%) leading declines. Trump's new tariffs raised inflation concerns, complicating the Fed’s rate cut prospects. The VIX surged to 27.98 (+16.2%), reflecting heightened market anxiety. Investors are closely watching upcoming US inflation data and JOLTS job openings, which could shape expectations for Fed policy.
• Europe: European markets extended losses Monday, tracking Wall Street’s sharp decline. The STOXX 50 fell 1.6%, the DAX lost 1.7%, and the CAC 40 declined 0.9%. Tech and industrial stocks suffered heavy losses, mirroring US weakness. Siemens Energy (-8.9%) and SAP (-4.9%) weighed on the DAX. Auto stocks bucked the trend, while defense and aerospace shares advanced on rising military spending. Germany’s Greens opposed debt brake reform, fueling fiscal policy concerns. Futures pointed to a modest rebound Tuesday, but sentiment remains fragile.
• Asia: Asian stocks followed Wall Street lower, with Japan’s Nikkei (-1.4%), South Korea’s KOSPI (-1.2%), and Hong Kong’s Hang Seng (-0.7%) all retreating. Tech stocks led the downturn, with SoftBank (-4%), Tokyo Electron (-2.2%), and Samsung (-0.5%) posting losses. China's CSI 300 Index (-0.5%) and Shanghai Composite (-0.7%) slipped on deflation concerns, despite improved outlooks for AI-driven growth. The yen strengthened, reflecting risk-off sentiment, while European equity futures hinted at a mild recovery.

Volatility

Market volatility soared, with the VIX spiking 16.2% to 27.98, its highest level since December. 0DTE options trading surged, contributing to exaggerated intraday moves. The S&P 500's sharp decline fueled hedging demand, while bond yields fell sharply, pricing in a 50% chance of a Fed rate cut by May. With inflation data due this week, traders remain on edge, bracing for further swings.

Digital Assets

Bitcoin extended losses, dropping 2.4% to $80,289, briefly hitting a four-month low of $76,677. Altcoins followed, with Ethereum (-8%), XRP (-1.6%), and Solana (-3.1%) under pressure. MicroStrategy (-13%), Coinbase (-12%), and Robinhood (-14%) tumbled as crypto-exposed stocks mirrored Bitcoin’s decline. Trump's tariff policies and economic slowdown fears continued to weigh on sentiment. Despite MicroStrategy's $21B capital raise to buy more Bitcoin, traders showed little enthusiasm.

Fixed Income

• US treasury yields wilted again, if not particularly sharply, given the furious sell-off in US equities yesterday, suggesting they are absorbing less in the way of safe haven flows relative to prior market cycles. This could be an expression of stagflation fears at the margin. After closing Friday at 4.30% , the US 10-year treasury benchmark closed yesterday some 9 basis points lower at 4.21% and fell further overnight to 4.15% before rebounding to 4.20% in early European hours. The 2-year benchmark nudged new five month lows below 3.83% before bouncing to 3.88% later in the session overnight as risk sentiment also rebounded.
• Japanese government bond yields dipped overnight all along the curve, with the 2-year JGB benchmark 4 basis points lower at 0.84% late in Asia and the 10-year falling sharply from its cycle high close of 1.58% on Monday, trading 1.52% in last Asia.

Commodities

• Oil weakness returned, mirroring declines across other markets, with Brent crude trading near USD 69 and close to the weakest level since 2021. Traders have been spooked by economic concerns triggered by Trump's aggressive tariffs focus, as well as increased production from OPEC+, and weakening demand in China.
• Gold dipped to USD 2,880 per ounce as broad market weakness and rising volatility triggered risk reductions from investors; however, at this point, given the strength of the recent rally, gold can drop to USD 2,813 without damaging the technical outlook. Investors are watching US inflation data for Federal Reserve insights.
• Copper futures fell below USD 4.70 per pound on Monday, with broad market weakness and disappointing economic data from China affected market sentiment. Overall, the NY traded futures contract continues to trade at a substantial premium to London amid fears import tariffs will boost domestic prices in the US.
• Grains traders await today’s WASDE report which will take existing trade tariffs into account as part of the global forecasts for the world’s corn, soybeans and wheat.

Currencies

• Currencies were largely on the sidelines amidst the risk-off angst in US equity markets yesterday, with EURUSD stuck in a tight range before rebounding slightly overnight and looking toward the recent cycle high posted at 1.0889.
• USDJPY posted new lows yesterday and even marginal further new lows overnight at 146.55 but rebounded back above 147.00 by late in the Asian session.
• CAD and AUD were somewhat more impacted by weak risk sentiment yesterday and possibly the fresh dip in oil prices in the former’s case. As well, new Liberal party leader and PM Mark Carney of Canada was out with a fiery speech directed at US President Trump.