Market Quick Take - 20 February 2025

Market Quick Take – 20 February 2025

Key points

• Equities: US hits record highs; Trump’s tariffs hit EU autos; Palantir -10% on CEO share sale.
• Volatility: VIX stable at 15; futures slightly up; market cautious but resilient.
• Digital Assets: BTC near $96K; XRP drops; Coinbase & MicroStrategy fall.
• Currencies: JPY powered higher in the Asian session, with USDJPY nearing 150.00
• Commodities: Crude pauses on US stock build. Gold hits fresh record on haven demand
• Fixed Income: US yields edged back lower as FOMC minutes reveal discussion on slowing or ending Fed’s QT
• Macro events: US Initial Jobless Claims, Philadelphia Fed Feb Business Outlook, Eurozone Feb Consumer Confidence, Japan National CPI

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

Macro data and headlines

• The FOMC minutes sparked a rally in treasuries and a weaker US dollar as they showed that Fed members discussed pausing or slowing the quantitative tightening (QT) policy, under which the Fed continues to sell USD 50 billion per month in Treasury holdings. They considered maintaining restrictive rates if the economy remained strong and inflation high but noted easing could occur if the labor market weakened, economic activity slowed, or inflation quickly returned to 2%. They emphasized the need for more evidence of sustained disinflation.
• US housing starts fell 9.8% month-over-month to an annualized 1.366 million in January 2025, down from December's 10-month high of 1.515 million and below the 1.4 million forecast. Severe snowstorms and cold weather disrupted construction, with potential rebounds limited by rising import tariffs and high mortgage rates.
• Ukrainian President Zelensky criticised US President Trump for being in a disinformation bubble and called the US demand for USD 500 billion in minerals "not serious." He stated that he cannot compromise his country and highlighted a lack of trust in Russian President Putin. Zelensky expressed his desire to end the war with Russia this year and stressed the importance of a 'constructive' relationship with the US.
• In response, Trump, via Truth, labelled Zelensky a dictator without elections and warned him to act quickly or risk losing his country. Trump accused Zelensky of convincing the US to spend USD 350 billion on an unwinnable war, suggesting it could never be settled without US and Trump's involvement.

Macro calendar highlights (times in GMT)

• 1330 – US Initial Jobless Claims
• 1330 – Philadelphia Fed Feb Business Outlook
• 1435 – Fed's Goolsbee Speaks
• 1500 – Eurozone Feb Consumer Confidence
• 1530 – EIA Natural Gas Storage Chang
• 1600 – US Jan Leading Index
• 1700 – DOE's Weekly Crude and Fuel Stock Report
• 2330 – Japan Jan. National CPI

Earnings events

• Today: Walmart, Booking Holdings, Airbus, Schneider Electric, Mercedes Benz, Mercado Libre, Nu Holdings, Block, Lloyds, Cheniere, Targa Resources, Fortescue, Cameco, Sprouts Farmers Market
• Friday: Constellation Energy, Standard Chartered

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

Equities

• US Markets: Futures Slip Amid Trade Tensions and Fed Caution
  US stock futures edged lower as investors processed renewed tariff threats from President Trump and cautious Fed minutes. The S&P 500 (+0.24%), Nasdaq 100 (+0.07%), and Dow Jones (+0.16%) hit record highs on Wednesday, with healthcare and consumer staples leading gains. Microsoft (+1.3%) climbed after unveiling a quantum processing unit, while Tesla (+1.8%) rebounded on competitor Nikola’s bankruptcy (-39%). However, Palantir dropped 10% as CEO Alex Karp planned a $1B share sale. Investors now focus on weekly jobless claims and earnings from Walmart, Alibaba, and Booking.
• European Markets: Stocks Fall on Trade Fears and Weak Earnings
  The Euro STOXX 600 (-1.4%) and DAX (-1.68%) dropped as Trump signaled a 25% tariff on autos, semiconductors, and pharmaceuticals, triggering steep losses in European automakers. Stellantis (-4.5%) and Volkswagen (-3%) led the decline. Philips tumbled 11% after missing earnings expectations. Meanwhile, European leaders met in Paris to discuss defense spending amid reduced US military integration. In France, the CAC 40 slid 1.18%, with Hermès (-3.47%) and Saint-Gobain (-4.22%) underperforming.
• Asian Markets: Hong Kong and China Lower on Tariff Concerns
  The Hang Seng Index (-1.4%) fell as tech stocks retreated following Trump’s tariff plans, despite Beijing's pro-tech stance. The CSI 300 Index (-0.4%) and Shanghai Composite (-0.2%) also declined. However, Morgan Stanley upgraded China stocks, citing improving governance and policy support. In South Korea, the KOSPI (-0.7%) snapped a seven-session rally, with Samsung Biologics (-1.2%) and SK Hynix (-3.2%) leading losses.

Volatility

VIX Steady at 15, Market on Edge
The VIX remained near 15.27, reflecting a market that is cautiously stable but not entirely at ease. VIX futures edged up to 17.150 (+1.44%), signaling uncertainty. Meanwhile, S&P 500 futures (-0.32%) and Nasdaq 100 futures (-0.45%) turned red. Treasury traders remain neutral as uncertainty over Trump’s tariffs and Fed policy limits directional bets.

Digital Assets

Bitcoin Steady Near $96K Amid Trade Uncertainty
Bitcoin (BTC) rose 0.23% to $96,806, while Ethereum (ETH) gained 0.34% to $2,723. Solana (+1.26%) bucked the trend, while XRP struggled (-2.37%). Crypto-related stocks were mixed: MicroStrategy (-4.58%) and Coinbase (-2.25%) fell, while Bitcoin mining firms saw slight gains. Market sentiment remains cautious as higher interest rates and potential tariffs could pressure crypto liquidity.

Fixed Income

• US Treasury yields fell after the Fed's meeting minutes suggested pausing balance sheet runoff – a process known as quantitative tightening, or QT, until the government’s debt-ceiling drama is resolved. With front-end yields dipping a bit more than 10-year, the news drove a small bull steepening of the yield curve
• Germany yields rose sharply yesterday, with the 10-year bund rising 6 basis points to reach 2.56%, perhaps on the sense that Germany and Europe more broadly may need to open up the fiscal taps to build a more robust military presence as the transatlantic alliance with the US is teetering.

Commodities

• The commodities sector rally extended further overnight, with the latest gains being led by surging natural gas prices amid another US cold snap, gold hitting a fresh record high, and silver being supported by industrial metal strength, where aluminium rose for a fifth day after the EU backed a gradual Russian import ban.
• Crude prices edged lower following a three-day rally, after the API, ahead of today’s official EIA report, said US stocks had risen by 3.3 million barrels last week. The market continues to lack a clear direction, with supply disruptions in Kazakhstan and the OPEC+ production increase delay being offset by global demand worries.
• Gold hit a fresh record near USD 2,950, supported by ongoing momentum and haven demand in response to Trump's increasingly erratic behaviour. The Fed's cautious stance on rates received little attention as the price continued towards its next big psychological level at USD 3,000.

Currencies

• The US dollar weakened late yesterday on the FOMC minutes showing the Fed discussing an end to QT, which sent US yields lower. The JPY accelerated its recent rally, with USDJPY breaking to new lows for the year and challenging the 150.00 level this morning, with the next level of note the December low of 148.65. Japan reports its January CPI figures tonight and Bank of Japan’s very low rate policy may have implications for Japan’s relationship with the US (Japan may want to avoid accusations from the Trump administration that it is unfairly keeping its currency artificially weak, etc.)

For a global look at markets – go to Inspiration.