Market Quick Take - 5 March 2025

Market Quick Take – 5 March 2025

Market drivers and catalysts

• Equities: Tariffs hit US, EU auto stocks collapse, defence stocks gain, futures rebound on tariff talks
• Volatility: VIX jumped to 26.35, closes at 23.51, futures down 3.96%, market futures higher
• Digital Assets: Bitcoin steady at $87K, MSTR +9.66%, miners weak, ETH gains
• Currencies: Massive surge in euro as EU’s Von Der Leyen floats EUR 800 billion for defence , Germany’s Merz moves to lift debt rules and secure EUR 500 billion infrastructure fund
• Fixed Income: Large rebound in global yields – European focus today after German policy moves late yesterday.
• Commodities: NY copper detach from global prices. Crude stages small rebound
• Macro events: US, UK, Eurozone Feb PMI

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

Macro data and headlines

• Trump speech underwhelms. In a 100-minute-long address to Congress, Trump defended his economic plans and called for a wide range of tax cuts and spending reductions, although for an increase on border spending. He also called for a halt to CHIPS and Science Act semiconductor manufacturing subsidy program and repeated the 25% tariffs for aluminium, copper and steel. While Trump didn’t address the new tariffs on Canada and Mexico other than criticizing the two countries on their surpluses with the US and allowing fentanyl to cross the border, US Commerce Secretary Lutnick said the Trump administration could announce a pathway for tariff relief on Mexican and Canadian.
• Germany goes big on fiscal. Leader of Germany’s CDU party and coming Chancellor Friedrich Merz will reconvene the Bundestag before the newly elected Bundestag sits next month to present a bill, together with likely coming government coalition partner, the SPD, that would exempt defence spending above 1% of GDP from “debt brake” rules. Another bill will introduce a constitutional amendment to create a EUR 500 billion fund for infrastructure that would for the next 10 years. Other measures would lift some limitations on debt rules at the state level. This will require a two-thirds majority to pass the Bundestag, which will require support from the Green party.
• China announces 2025 growth target. China’s Premier Li Qiang announced that China will pursue a 5% GDP growth target for this year, saying that it would be difficult. The top priority will be boosting consumption, the first time this priority has been named since Xi Jinping became president in 2012. The growth target will require record government deficits and local government debt issuance, some of it to subsidize consumer spending.
• European Commission President Ursula von der Leyen announced plans to boost Europe's defence industry, potentially mobilizing nearly €800 billion. She proposed greater fiscal flexibility for member states and €150 billion in loans to support these efforts.
• Prime Minister Justin Trudeau announced 25% tariffs on $155 billion of US imports, including beer, wine, and orange juice. He warned of further tariffs on C$125 billion of US products if President Trump's tariffs on Canadian goods persist for 21 days.
• Euro Area's unemployment rate held steady at a record low of 6.2% for the third month, below the expected 6.3%. This suggests a tight labour market despite economic slowdowns in major economies.

Macro calendar highlights (times in GMT)

1315 – US Feb ADP Employment Change
1500 – US Jan Durable Goods Orders
1500 – US Feb ISM Services
1530 – DOE US Crude and Fuel Stock Report

Earnings events

• Today: Marvell Technologies, Adidas, Veeva Systems, Zscaler
• Thursday: Broadcom, Costco, Merck, Canadian Natural Resources, Deutsche Post,
• Friday: Constellation Software

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

Equities

• US: US equities dropped sharply on Tuesday as escalating trade tensions weighed on sentiment. The S&P 500 fell 1.22%, while the Dow Jones lost 1.55%, extending a two-day decline of nearly 3%. The Nasdaq 100 slipped 0.36%, with chipmakers and crypto-related stocks outperforming broader losses. Tesla plunged 4.4% as data showed a 49% YoY drop in China sales, dragging GM (-4.6%) and Ford (-2.9%) lower. Financials and industrials suffered, while defensive plays like healthcare outperformed. Futures rebounded Wednesday as Commerce Secretary Lutnick hinted at a potential compromise on tariffs with Canada and Mexico.
• Europe: European equities plunged Tuesday, led by DAX (-3.5%), CAC 40 (-1.95%), and STOXX 50 (-2.77%), as Trump’s 25% tariffs on Canada and Mexico took effect, triggering retaliatory measures. Auto stocks collapsed, with Continental (-12%) and Volkswagen (-6%) leading declines. Fresenius Medical Care tumbled 9.3% after its parent company cut its stake. Defense stocks saw renewed interest after the EU announced a €800B defense plan to counter the halt in US aid to Ukraine. European banks slumped on tariff fears, with Santander and BBVA down ~6%.
• Asia: Asian stocks rebounded Wednesday after US officials suggested tariff negotiations may be possible. Hong Kong’s Hang Seng jumped 2.17%, while Japan’s Nikkei gained 0.5%. China set a 5% GDP growth target for 2025 at its annual parliamentary session, vowing AI and tech sector support. Investors responded positively to Beijing’s 300B yuan consumer stimulus plan. However, Australia’s ASX 200 fell 0.8%, despite stronger-than-expected Q4 GDP growth of 0.6%.

Volatility

The VIX spiked to 26.35 intraday before settling at 23.51 (+3.2%), reflecting tariff-driven uncertainty. Traders flooded into VIX call options, with some betting on a rise to 60-75. VIX futures indicate easing fear, down 3.96% this morning. Equity markets are also recovering, with S&P 500 futures up 0.63% and Nasdaq 100 futures up 0.73%. Investors will watch today’s ADP jobs report, ISM Services PMI, and crude oil inventory data for further market direction.

Digital Assets

Bitcoin stabilized near $87K (+1.02%), while Ethereum gained 3.2% to $2,177. Crypto stocks saw mixed moves—MicroStrategy surged 9.66%, while Riot Platforms slid 5.08%. Optimism faded over Trump’s proposed national crypto reserve, pressuring miners. Coinbase (+3.3%) bucked the trend after reporting higher institutional trading volumes.

Fixed Income

• US Treasury yields bottomed out at the lows in risk sentiment yesterday, with the 2-year benchmark as low as 3.84% and the 10-year benchmark as low as 4.10%, but then rebounded sharply into the close as risk sentiment improved, with the 2-year closing at 3.99% and the 10-year at 4.25%. The yield rebound was perhaps in part on hopes of tariff relief on US Commerce Secretary Lutnick’s mention the president may offer a pathway to tariff relief for Canada and Mexico.
• European yields rebounded sharply yesterday, and may be set for a further extension higher as Germany’s coming Chancellor Merz announced the moves to pass new bills to create a new large infrastructure fund and relieve “debt brake” rules if spending is on defence late yesterday. The 10-year German Bund closed yesterday at 2.50%. If yield rise further, focus will be on the January cycle top of 2.65% and then the decade-plus top of 3.03%.

Commodities

• HG Copper in NY rose to a 9.5% premium above London after Trump in an overnight address to Congress repeated his call for tariffs on imports, making copper more expensive for US consumers. Elsewhere, China setting a bullish growth goal of about 5% generally helped sentiment with London prices trading 1% higher overnight.
• Gold dipped from a near record high, but overall remains supported as the trade war escalates, central banks buy bullion, the dollar weakens, and the US economy heads towards stagflation.
• Brent crude briefly dipped below USD 70 before staging a small comeback after Lutnick suggested some tariff relief on Mexico and Canada imports. An OPEC+ decision to gradually hike production is relatively neutral given the risk of increased sanctions against Iran. Ahead of EIA’s official update, the API reported a 1.5 million barrel increase in US crude stocks.

Currencies

• The euro surged broadly on the two barrels of a coming potential fiscal bazooka as the EU’s Van Der Leyen discussed EUR 800 billion in defence spending and Germany’s Merz moved to create a EUR 500 billion infrastructure fund and relieve debt rules (see above). The euro ripped through major resistance levels versus the US dollar as EURUSD managed a move well clear of 1.0600, a key chart point. EURGBP and EURCHF also rebounded sharply.
• CAD and MXN found relief on US Commerce Secretary Lutnick discussing a possible path to tariff relief from the Trump administration, but the rebound was cut rather short as the market has little to go on, with no follow up from the president himself yet. USDCAD trades 1.4420 this morning after as high as 1.4543 late yesterday
• The yen weakened sharply on the rebound in global bond yields, particularly versus the surging euro.