Market Quick Take – 26 May 2025

Market drivers and catalysts

• Equities: Tariff drama; tech and EU under pressure; futures rebound on deadline extension
• Volatility: VIX jumps; near-term risk persists; mega-cap earnings ahead
• Digital assets: Bitcoin holds near highs; IBIT inflows strong; crypto stocks consolidate
• Fixed Income: European yields likely set to reverse Friday’s drop on Trump tariff delay
• Currencies: USD and JPY weakest as Euro and AUD surge overnight.
• Commodities: Gold lower, crude up as Trump postpone raised tariff on the EU
• Macro events: U.K and U.S. Markets Closed

Macro data and headlines

• Trump postponed the 50% tariff on the EU to July 9 after a call with European Commission President Ursula von der Leyen, who described the conversation as a "good call" and emphasized the need for more time to "reach a good deal."
• Sales of new single-family homes in the US rose by 10.9% to 743,000 units in April, exceeding expectations of 692,000. This marks the largest increase since August 2022 and the highest sales since February 2022, driven by builder incentives despite rising mortgage rates.
• Canadian retail sales likely increased by 0.5% in April 2025, after a revised 0.8% rise in March to C$69.8 billion, marking the year's highest growth. Six of nine subsectors, led by motor vehicles and parts, showed gains despite US tariffs and Ottawa's retaliation.
• Trump said he was “absolutely” considering new sanctions against Russia after Moscow launched missile and drone strikes across Ukraine. Saying that Putin “has gone absolutely CRAZY” and not happy about seeing the “killing a lot of people” continuing.

Macro calendar highlights (times in GMT)

U.K and U.S. Markets Closed

Fed speakers: Goolsbee (1230), Musalem & Schmid (1335), and Cook (1600)

Earnings events

• Tuesday: Xiaomi
• Wednesday: Nvidia, Salesforce, Synopsys, Veeva Systems, Agilent, HP
• Thursday: Dell, Marvell Technology, Zscaler, Netapp
• Friday: Costco

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

Equities

• US: US stocks dropped Friday as Trump escalated trade tensions, threatening 25% tariffs on Apple and a 50% tariff on EU imports, with tech leading the selloff (AAPL -3%, Micron, Qualcomm, Nvidia all >-1%). S&P 500 -0.67%, Nasdaq 100 -0.93%, Dow -0.61%. Apple’s valuation dipped below $3T. After markets closed, Trump postponed the 50% EU tariff deadline to July 9, sparking a strong rebound in US futures (+1%) and calming fears of imminent protectionist moves. US markets are closed Monday for Memorial Day.
• Europe: European stocks tumbled Friday on Trump’s tariff threat (STOXX 50 -1.9%, DAX -1.54%, CAC 40 -1.65%), led by heavy losses in autos, luxury, and banks. Germany’s Q1 GDP was revised up to 0.4%, showing resilience, but trade worries dominated. Markets recovered in early Monday futures trading as the EU tariff deadline was pushed out, but sentiment remains cautious with ongoing volatility in EU-US relations.
• UK: UK markets followed Europe lower (FTSE 100 -0.24%), with losses driven by global trade concerns and declines in major banks and energy names. Solid UK retail sales (+1.2% MoM) and improved consumer confidence provided little support. The UK market is closed Monday for a holiday.
• Asia: Asian equities were mixed as Trump’s tariff threats and subsequent postponement whipsawed sentiment. Japanese stocks outperformed (Nikkei +0.6%) amid ongoing US-Japan trade talks and Trump’s apparent support for Nippon Steel’s US buyout. Hong Kong’s HSI saw early weakness but is stabilizing, supported by strong IPO activity and PBoC liquidity injections. Apple suppliers across Asia slid on renewed tariff threats, while tech and EV stocks remain volatile.

Volatility

Volatility spiked into Friday’s tariff-driven sell-off and remains elevated ahead of a U.S. Memorial-Day-thinned session. The VIX settled at 22.29 (+9.9%), after touching an intraday high of 25.53 on 23 May, its highest close in six weeks. Ultra-short-dated gauges jumped harder: VIX1D finished at 21.73 (+31.3%) while VIX9D closed at 20.63 (+12.0%), signaling brisk demand for near-term hedges. The front-month VIX future edged up to 22.04, leaving the curve mildly in contango. With U.S. cash equities shut today, intraday compression is possible, yet the still-elevated short-tenor indices highlight lingering event risk around Trump-EU trade talks and this week’s mega-cap earnings (notably Nvidia).

Digital Assets

Bitcoin trades steady above $109.5K (+0.6%), consolidating gains after last week’s breakout to nearly $112K. Ethereum at $2,572 (+0.8%). BlackRock’s IBIT ETF continues to draw significant inflows ($306M on 19 May, $6.5B past month), reaching $62.9B in AUM—top five for 2025 inflows—highlighting robust institutional demand. Crypto-related equities (COIN -3.2%, MSTR -7.5%, MARA -5.8%) pulled back, mirroring modest consolidation in digital assets as profit-taking set in. Regulatory tailwinds and new US stablecoin legislation remain key supports.

Fixed Income

• US long treasury yields fell on Friday amidst weak risk sentiment as US President Trump lashed out at Europe and threatened to implement higher tariffs (see story above). But after the 10-year treasury yield probed lower to 4.45%, for example, treasuries sold off and the benchmark closed the week back just above the 4.50% level, still down slightly on the day. The two-year treasury benchmark plunged 9 basis points to 3.9% before rebounding to unchanged at 3.99% Friday. US treasury markets are closed today, so we have yet to see the reaction to Trump’s delay of the EU tariff threats until July 9.
• European yields were down sharply on Friday on Trump’s threat to impose steep tariffs before that threat was delay last night, so European bonds yields will likely gap higher today to at least partially reverse Friday’s action.
• High yield credit spreads in the US widened again Friday amidst widespread risk off, with the Bloomberg high yield credit spread to US treasuries we track widening 7 basis points to close the week at a two-week high of 330 basis points.

Commodities

Currencies

• The Euro jumped to new local highs versus the US dollar after Trump delayed threatened new tariffs against the EU until July 9, with EURUSD trading above 1.1400 overnight for the first time in nearly a month. This after the USD ended last week on a weak note. The USD was broadly weak overnight, save versus the Japanese yen , which weakend across the board. The JPY was even weaker than the US dollar overnight, if by a small margin.
• AUDUSD traded clear of 0.6500 and to new highs for 2025 and since December of last year, possibly taking its lead from USDCNH, which dipped to new lows for the year below 7.17 overnight

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