Market Quick Take - 19 March 2025

Market Quick Take - 19 March 2025

Market drivers and catalysts

• Equities: Fed decision awaited; tech-led decline; Europe rises on German spending package; Asia mixed
• Volatility: Sharp rise ahead of Fed; significant short-term spike; geopolitical concerns remain high
• Digital Assets: Crypto stable but cautious; BTC technical risks persist; crypto stocks underperform
• Currencies: USDJPY near 150 as BOJ holds rates steady
• Fixed Income: US Treasury yields rangebound ahead of FOMC, Bund yields lower after vote
• Commodities: Gold’s record run continues. Crude lower on stock build and trade frictions
• Macro events: US Fed Rate Decision

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

Macro data and headlines

• Germany's outgoing parliament approved a major increase in government borrowing, including an overhaul of debt rules. The CDU/CSU bloc, SPD, and Greens secured a deal exempting defence spending from debt limits and establishing a €500 billion infrastructure plan. It now awaits a vote in the Bundesrat on Friday.
• U.S. import prices increased by 0.4% in February 2025, surpassing expectations. Fuel prices rose by 1.7%, while nonfuel import prices went up by 0.3%, driven by higher costs for industrial supplies and consumer goods.
• Canada's inflation rate rose to 2.6% in February 2025, the highest in eight months, exceeding expectations. The increase was driven by the end of GST and HST (harmonized sales tax) breaks, raising prices of eligible goods. Inflation slowed for restaurants and alcoholic beverages, causing a rebound in the food subindex.
• U.S. industrial production increased by 0.7% in February 2025, surpassing expectations. Manufacturing output rose by 0.9%, driven by an 8.5% jump in motor vehicles and parts, while other manufacturing increased by 0.4%.
• Vladimir Putin rejected Donald Trump’s demand for a 30-day ceasefire in Ukraine, agreeing only to limit attacks on energy infrastructure while demanding a halt to the flow of weapons and intelligence to Kyiv. Trump despite getting nothing, still hailed the call as progress, while European allies pushed to accelerate arms shipments to Ukraine.

Macro calendar highlights (times in GMT)

1430 – EIA’s Weekly Crude and Fuel Stock Report
1800 – US Fed Rate Decision

Earnings events

• Wednesday: General Mills, Williams Sonoma
• 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: US equities declined Tuesday, halting a two-day recovery as investors cautiously awaited the Fed’s policy decision today, with rates expected unchanged. The S&P 500 dropped 1.07% nearing correction territory, Nasdaq fell 1.71%, and Dow Jones slid 0.62%. Tech led the losses, notably Tesla (-5.3%) on lowered price targets, Nvidia (-3.4%), Alphabet (-2.3%) post-Wiz acquisition, and Palantir (-4%). Investor anxiety persists amid recession worries and trade tensions. US futures stabilized overnight, awaiting economic outlook clarity from the Fed.
• Europe: European equities continued to climb Tuesday, supported by Germany's historic €500 billion defense and infrastructure spending package. The STOXX 50 rose 0.7%, nearing March record highs, and the STOXX 600 gained 0.6%. DAX (+1%) reached new records led by autos and banks, including strong gains in Mercedes-Benz (+2.2%) and Deutsche Bank (+3.4%). CAC 40 also rose (+0.5%), driven by financial sector optimism and positive sentiment around potential Ukraine ceasefire negotiations between Trump and Putin.
• Asia: Asian markets traded mixed Wednesday, digesting muted cues from Wall Street and a steady Bank of Japan rate decision (0.5%). Japan’s Nikkei (+0.7%) remained buoyant, led by major trading houses. Hong Kong’s Hang Seng (+0.1%) edged higher, benefiting from tech gains and record-high BYD on new EV charging tech. China’s stocks paused after recent stimulus-driven gains, while South Korea’s KOSPI rose 0.7% despite political uncertainty. Regional markets remain cautious ahead of the Fed decision and potential tariff developments.

Volatility

Volatility surged Tuesday with the VIX closing at 21.70 (+5.8%), driven by Fed uncertainty and geopolitical concerns. Short-term volatility spiked notably, with VIX1D up an impressive 35.1% indicating strong expected moves today around the Fed’s decision and Powell’s subsequent press conference. VIX futures remain flat overnight, highlighting cautious investor sentiment ahead of key economic updates and ongoing geopolitical developments.

Digital Assets

Crypto markets stabilized cautiously ahead of today's Fed decision. Bitcoin hovered around $83,125 (+0.5%) after briefly dipping below $82,000 amid persistent tariff uncertainty and bearish technical signals. Ethereum marginally rose to $1,935, XRP remained flat at $2.28, and Solana saw minor gains (+0.5%). Crypto-related stocks faced headwinds, with Coinbase down 4.1%, Marathon -6.9%, and MicroStrategy dropping 3.8%. Investors remain wary, awaiting Fed guidance that could significantly influence crypto sentiment.

Fixed Income

• US Treasury yields continue to trade mostly sideways ahead of today’s FOMC meeting which is widely expected to deliver no change in short-term funding rates. The 10-year benchmark yield has declined by around 25 basis points since the last meeting amid recession fears and haven demand, and for now it has settled in a tight range around 4.30%
• German bond yields drifted lower after lawmakers approved proposals for hundreds of billions of euros in defense and infrastructure spending. The 10-year yield softened 5 basis points to 2.81% with investors contemplating the impact of a significant rise in debt sales from next year

Commodities

• Gold extended its record-breaking rally to USD 3,045, a year-to-date gain of 15%, while an ETF tracking the major gold miners has rallied close to 27%. Silver meanwhile rose above USD 34, reaching a five-month high. Investment metals continued to enjoy strong demand from investors seeking protection amid multiple uncertainties.
• HG copper extended its recent run of gains to a 10-month high at USD 5.03 per pound, making it increasingly clear that the real driver is the tariff threat to U.S. imports. A 12% premium in NY over LME is pulling supply into the U.S., depleting stocks elsewhere. In short, this isn’t about end-user demand—at least for now.
• Crude prices saw a sharp reversal on Tuesday which extended overnight after the API reported a 4.6 million barrel jump in US stocks with trade frictions potentially hitting demand. Focus on EIA’s weekly stock report and FOMC.

Currencies

• USDJPY rose after the BOJ left rates unchanged, saying a virtuous cycle of wages and prices is intensifying, while expressing caution about global trade tensions.
• EURUSD rose to a five-month high after German lawmakers passed a bill on debt-financed defense and infrastructure spending, before drifting lower during the Asian session.