Global Market Quick Take Europe - 24 January 2025

Global Market Quick Take: Europe – 24 January 2025

Key points

• Equities: US record highs, healthcare/industrials lead, DAX at peaks
• Volatility: VIX steady at 15.02, SKEW at 179, muted downside hedging
• Digital Assets: Bitcoin $105,012 (+1.1%), Trump’s executive order, altcoins rise
• Currencies: JPY rallies on hawkish BoJ. USD softer on dovish Trump tariff comments on China.
• Commodities: Crude heading for weekly loss; gold near October record as dollar softens
• Fixed Income: US yields ease back lower overnight, while Japanese short yields post new cycle highs on hawkish BoJ
• Macro events: January PMIs from France, Germany, Euro Zone, UK and the US

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

Macro data and headlines

• President Trump in an overnight interview said he would prefer not to impose tariffs on China, a sign that he is willing to negotiate with Beijing, and combined with an earlier call for the Fed to lower interest rates and OPEC to lower oil prices, the dollar has seen broad weakness, with the dollar index hitting a one-month low.
• The Bank of Japan raised its interest rate, as expected, by 25 bps to 0.5% after signalling that is sees a faster pace of inflation in the coming years compared with its previous forecast. During the press conference, BoJ Governor Ueda said rates will rise if economic outlook holds.

Macro events (times in GMT)

January Flash PMIs from France (0815), Germany (0830), Euro Zone (0900), UK (0930) and the US (1445), US Jan University of Michigan Consumer Sentiment (1500), US Dec Existing Home Sales (1500)

Earnings events

• Today: American Express, Verizon, NextEra Energy
• Next week: Apple, Microsoft, Amazon, Meta, Tesla, Visa, Mastercard, Exxon Mobil, LVMH, SAP, ASML, Abbvie, Chevron, T-Mobile US, Samsung Electronics, Roche, ServiceNow, Blackstone, IBM, Shell, Caterpillar, Qualcomm, Boeing, Starbucks, Intel

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

• US: US stocks continued their upward momentum on Thursday, with the S&P 500 gaining 0.53% to a new record high, the Dow climbing 0.92% (+408 points), and the Nasdaq advancing 0.22%. Optimism was fueled by President Trump’s speech at the World Economic Forum, where he called for rate cuts and lower oil prices, while warning global businesses of potential tariffs. Healthcare (+1.35%) and industrials (+0.96%) led gains, supported by strong earnings from GE (+6.6%) and Union Pacific (+5.2%). However, tech underperformed as semiconductor stocks slipped following SK Hynix’s weak demand outlook. American Airlines tumbled 8.7% after issuing disappointing guidance. Futures are steady as investors monitor key PMI data and earnings from American Express and Verizon.
• Europe: European equities extended gains on Thursday, with the STOXX 600 up 0.22% and the DAX rising 0.74% to another record high. Optimism surrounding Trump’s pro-growth policies and easing trade rhetoric buoyed sentiment, alongside strong corporate earnings. Siemens Energy surged 6.6% on favorable analyst commentary about AI-driven infrastructure demand, while Adidas gained 1.9% after upbeat results. UK’s FTSE 100 also neared record levels, supported by rising energy and industrial stocks. Investors are eyeing next week’s ECB meeting, where another rate cut is anticipated, and key macro data including Eurozone PMIs today.
• Asia: Asian markets are trading higher on Friday, with Hong Kong's Hang Seng surging 1.94% (+383 points) and China’s CSI 300 gaining 1%, boosted by President Trump’s positive comments about trade talks with Xi Jinping. Beijing’s plans to encourage insurers to purchase mainland-listed shares also supported sentiment, injecting potential long-term capital into markets. Japan’s Nikkei rose 0.5%, with the Bank of Japan raising interest rates to 0.50% in response to resilient economic growth. However, tech stocks faced mild profit-taking following a strong AI-driven rally earlier in the week.

Volatility

Volatility remains muted, with the VIX holding steady at 15.02 (-0.53%) and VIX futures edging up to 16.50 (+0.16%). Short-term measures like VIX1D and VIX9D fell further, indicating easing near-term concerns. The SKEW index remains elevated at 179.32, suggesting heightened tail-risk expectations, though it may not signal immediate volatility. Options market activity highlights Nvidia, Tesla, and Pfizer, reflecting strong investor focus on AI, healthcare, and industrial sectors. The persistently low put/call ratio (0.78) reflects market optimism, though traders should be cautious about the lack of downside hedging.

Digital Assets

Bitcoin rebounded 1.1% to $105,012, supported by optimism around Trump’s executive order to develop a regulatory framework for digital assets. However, the lack of immediate clarity on his plans for a national crypto stockpile weighed on sentiment. Altcoins also gained, with Ethereum up 1.9% and Solana rising 3.6%. In contrast, Trump’s memecoin ($TRUMP) extended losses, falling another 9% to $34.19 amid high volatility and ethical concerns. Broader markets remain cautious as crypto volumes lag behind traditional equities, which are benefiting from an AI-driven rally.

Fixed Income

• US Treasury yields retreated overnight after the 10-year benchmark posted a high for the week at 4.66%, trading 4.62% in early Europe.
• The BoJ hiked the policy rate 25 basis points and Governor Ueda intoned confidently on the outlook for the Japanese economy, raising anticipation of further hikes to come this year, as the 2-year JGB yield posted a new high for the cycle above 0.70%.

Commodities

• The Bloomberg Commodity Index trades flat in the week following a strong run up in early January, as the impact of Trump’s messages impact sectors differently. Losses across the energy sector, and some industrial metals being offset by broad gains across the agriculture sector and precious metals.
• Crude oil prices are heading for their first weekly decline in five following a week that saw profit taking from funds amid the risk of a global trade war lowering growth and demand. In addition, Donal Trump has called for US producers to increase production while requesting OPEC to lower oil prices. Against this wish list, prices have been supported by sanctions on Russian oil and cold winter demand.
• Gold is heading for its best week since November to trade near the October record high at USD 2,790, supported by haven demand amid an unpredictable Trump in the White House, a softer dollar as the tariff threat ebb and flows, and calls for the Fed to cut rates.

Currencies

• The US dollar weakened sharply on President Trump’s indicated preference for not imposing tariff on China, though he did say, “We have one very big power over China, and that’s tariffs, and they don’t want them….And I’d rather not have to use it. But it’s a tremendous power over China.” The USD selling took EURUSD up to challenge just above 1.0458 resistance, with 1.0600 the next focus area if the move can hold
• The Japanese yen rose against a weak US dollar and more broadly on the Bank of Japan’s hike and hawkish guidance, although USDJPY failed to maintain lower levels after testing the lows of the year below 155.00. JPY crosses also pushed back lower after testing the highs of their respective ranges ahead of the BoJ decision.