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Market Quick Take – 9 May 2025
Market drivers and catalysts
- Equities: UK-US deal lifts global stocks; tariff relief hopes drive tech, autos
- Volatility: VIX drops; uncertainty persists but direction unclear
- Digital assets: BTC consolidates near $104K; ETH rallies post-upgrade; crypto stocks surge
- Fixed Income: US yields lift across the curve on strong risk sentiment, weak 30-year auction
- Currencies: USD firmed on strong risk sentiment and hopes for trade deals, though it softened off local highs overnight
- Commodities: Easing trade tensions boost sentiment, led by energy
- Macro events: BOE and FED speakers
Macro data and headlines
- President Trump announced a trade framework with the UK, calling it a historic achievement, though it stopped short of a full agreement. It offers the US better market access and faster customs for exports, while the UK gets limited relief on auto, steel, and aluminum duties.
- China’s April Trade surplus rose 8.1% YoY, far more than the +2.0% expected. The surplus for the month totaled USD 96.1 billion, despite US President Trump’s Liberation Day tariffs going into effect earlier in the month. China’s exports to the US fell some 17.6 percent from March levels, with increases to the rest of the world.
- Family offices in Asia are reallocating portfolios, with some exiting the U.S. entirely in favor of Asia and Europe, especially Hong Kong and mainland China, citing uncertainty and recession risks. This marks a shift from the U.S., once a top investment destination, as investors take profits and seek better valuations elsewhere
- The focus on trade deals now turns to South Korea and Japan, but Commerce Secretary Howard Lutnick warned these deals will take much longer to finalize than the UK framework. He also sees potential for a deal with India but warns it will require a lot of work. The immediate focus now moves to US-China talks this weekend with Trump urging investors to buy stocks before, leading the market to speculate a reduction in tariffs could be on the cards.
- Nonfarm labour productivity fell by 0.8% in Q1, and labour costs rose by 5.7%. Oxford Economics attributes the productivity drop to unusual factors, not a trend shift, and the rise in costs doesn't signal faster wage growth.
- Jobless claims fell to 228,000, below expectations, with continued claims at 1.879 million. Claims are stable despite tariffs, with last week's rise due to NY school spring break. Labour market trends may be clearer by July's FOMC meeting, making June easing unlikely.
Macro calendar highlights (times in GMT)
0600 – Norway Apr. CPI
0840 – UK Bank of England Governor Bailey to speak
1115 – UK Bank of England Chief Economist Pill to speak
1230 – US Fed’s Williams to speak
1230 – Canada Apr. Employment Data
Earnings events
Next week
- Monday: Constellation Software
- Tuesday: Softbank, Nu Holdings
- Wednesday: Tencent, Cisco Systems, Sony
- Thursday: Walmart, Deutsche Telekom, Allianz, Mitsubishi Financial, Deere, Applied Materials
- Friday: Richemont
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
- US: Wall Street rallied Thursday as optimism over a new UK trade deal and hopes of progress in China talks lifted sentiment. The S&P 500 +0.58%, Nasdaq +1.07%, and Dow +0.62%, led by tech and industrials. Boeing (+3.3%) surged on a $10B UK aircraft order, while Tesla (+3.1%) and Palantir (+7.9%) helped boost Nasdaq. Small caps outperformed, with Russell 2000 +1.85%. After-hours saw Affirm and Coinbase drop on earnings. Trump confirmed more trade deals are likely, hinting at possible China tariff relief after weekend talks in Switzerland.
- Europe: European stocks closed higher Thursday and are set to open up again, buoyed by the US-UK trade deal and speculation of easing US-China tensions. STOXX 50 +1.1%, DAX +1.02%, and CAC 40 +0.89%, with gains driven by tech, banks, and autos. UniCredit, ASML, and Stellantis posted strong gains. BoE cut rates to 4.25%, the Riksbank and Norges Bank held steady. Losses in Swiss equities and UK pharma, including Novo Nordisk -4%, and Mercedes Benz -6%, capped gains. Traders eye industrial production data and earnings from Commerzbank and Mediobanca.
- UK: The FTSE 100 -0.32%, underperformed peers despite the landmark trade deal with the US, as the BoE's rate cut and economic caution weighed on sentiment. Rolls-Royce and Melrose rose on steel tariff relief, but energy and utility stocks lagged. The BoE lowered its policy rate by 25bps, and flagged long-term risks from global trade tensions. Sterling slipped modestly vs USD. Investor attention turns to US-China trade talks and local Q1 results from IAG and Rightmove.
- Asia: Asian markets were mixed. Nikkei +1.5%, Hang Seng +0.3%, but Shanghai -0.3%, as optimism over the US-UK deal and possible China tariff rollbacks battled caution ahead of trade talks. Japan led on trade momentum and yen weakness. Chinese data showed exports +8.1%, well above forecasts, while imports declined just -0.2%. Despite macro support, Hong Kong and China equities struggled to hold gains. Semiconductor names dragged on Shanghai after weak earnings from Hua Hong.
Volatility
Volatility declined further. VIX -4.54% to 22.48, VIX1D -8.44%, and futures (VIX1) down to 22.10. Despite recent highs, traders shrugged off uncertainty ahead of US-China talks. VIX options volume exceeded average, with 82.5% in calls. No major economic releases today. As fears eased, the VIX continues to act more as an uncertainty gauge than a reliable directional indicator—underscoring market resilience in the face of tariff news.
Digital Assets
Bitcoin hovered just below $104K (-0.21%), reflecting consolidation after surging earlier this week on Trump’s trade optimism. Ethereum +1.6% to $2,243 after a 20% rally on the Pectra upgrade and spike in open interest. Coinbase slipped post-earnings but announced a $2.9B acquisition of Deribit to dominate crypto derivatives. Altcoins like MARA +7.2%, RIOT +7.65%, and MSTR +5.6% rallied. The crypto market remains firmly risk-on, buoyed by macro easing hopes and institutional deal momentum.
Fixed Income
- US treasury yields rose yesterday amidst strong risk sentiment before falling back overnight in the Asian session. A 30 year US Treasury bond auction saw weak demand, with the 30-year benchmark yield rising 10 basis points. The entire yield curve lifted yesterday in fact, as the 2-year US benchmark yield rose about 9 basis points and is testing the high of the recent range near 3.87%
- 10-yearJapanese government bond yields rose again after the prior day’s weak 10-year JGB auction, with the 10-year yield up another 3 basis points at a new three-week highs near 1.37%.
- Corporate credit yield spreads tightened sharply yesterday, with the Bloomberg High Yield spread to US treasuries indicator we track some 14 basis points tighter to 342 basis points, yesterday. For perspective, the indicator stood at 334 basis points before the Liberation Day tariff announcements, so it has come almost full circle.
Commodities
- The Bloomberg Commodities Index is heading for a small weekly gain, despite a stronger dollar, as trade optimism gives the energy sector a boost, while precious metals, including silver, continue to attract demand. Elsewhere, industrial metals trade lower, led by HG copper, as the tariff premium over London collapses to 6.5% from around 15% last week. The agricultural sector is seeing broad losses, with US crops falling on crop friendly weather.
- Crude has rallied to the center of its recent 10-dollar range with WTI trading around USD 60 and Brent 63. Supported by stalling US production growth, trade talk optimism, and further US and UK indirect sanctions against Iran and Russian oil exports.
- Gold looks rangebound for now after struggling above USD 3400 earlier in the week in response to an improved risk sentiment amid easing trade tensions which has given the equity market a boost while strengthening the USD and US Treasury yields.
Currencies
- The US dollar firmed to local highs in places amidst firm risk sentiment and hopes that the UK-US trade deal points the way to friendlier than feared trade deals with the rest of the world. EURUSD tested the key 1.1200 area (major 2024 high was at 1.1214), while USDJPY teased above 146.00 overnight, topping out at 146.19 before falling back toward 145.50 in early European trading. The 146.54 level in USDJPY is important as a significant low in March on the way down to test 140.00.
- Ahead of US-China trade talks at the weekend, the USDCNH has backed up well above 7.22, suggesting little pressure
- GBP saw little volatility on the Bank of England meeting yesterday, which brought minor support as two voters surprisingly dissented on the hawkish side, in favour of no cut. The US-UK trade deal announcement seems to have been baked into the cake as EURGBP is stuck in the pivotal 0.8450-0.8500 area
- Sweden’s Riksbank and Norway’s Norges Bank powered little volatility in SEK and NOK. The Riksbank waxed a bit more cautious and dovish as it hinted at more easing later this year, driving short Swedish rates a few basis points lower, which contrasted with the rise in short European rates yesterday. The Norges Bank recycled prior language pointing to cuts that could start later this year.
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