Market Quick Take – 7 July 2025

Q3-2025 Macro Outlook:
Less chaos, and hopefully a bit more clarity

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Market drivers and catalysts

• Equities: US tariffs, rotation out of tech, Europe/UK weakness, Asia cautious
• Volatility: VIX low, options market calm, ±36pt SPX move expected
• Digital assets: BTC steady, IBIT/ETHA in focus, retail activity strong
• Fixed Income: US yields soften on trade tensions. Treasury auctions in focus
• Currencies: USD strength seen against JPY and AUD on tariff threats
• Commodities: OPEC pumps and crude dumps (a bit), Wheat slumps on harvest pressure
• Macro events: Germany June industrial Production. US tariff letters and trade deals

Macro data and headlines

• Trade tensions are back in view after Trump said those aligning with the “anti-American policies of BRICS” will face an additional 10% levy. Also today, the US will start sending out tariff letters and also announce trade deals, from 12 pm eastern time, while Treasury Secretary Bessent stated tariffs would return to April 2 levels if no deal is reached. Multiple countries, including Japan, South Korea, India, and others, are scrambling to secure trade deals or extensions to avoid tariffs.
• Elon Musk launched a political party, criticising the deficit increase from USD 2 trillion to USD 2.5 trillion under Biden as potentially bankrupting the US.
• In May 2025, Japan's nominal wages rose 1% year-on-year, below the expected 2.4% increase, due to an 18.7% drop in bonus payments. Real wages fell 2.9%, marking the steepest decline in nearly two years.
• China's trade surplus increased to USD 103.22 billion, surpassing expectations of USD 101.3 billion, as exports rose and imports fell more than expected. Exports grew 4.8% year-on-year, below the 5.0% estimate and down from April's 8.1% growth.
• Israel attacked Houthi targets in three Yemeni ports and a power plant, marking its first strike on Yemen in nearly a month, the Israeli military announced on Monday.

Macro calendar highlights (times in GMT)

0600 – Germany May Industrial Production
1600 – US tariff letters and trade deals announcements
1800 – US CFTC’s delayed COT report covering week to 1 July
BRICS Summit in Rio de Janeiro (final day)

Earnings events

Thursday: The Progressive Corporation, Fast Retailing, Cintas Corporation, Kongsberg, Delta Airlines

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

Q3-2025 Investor Outlook:
Beyond American shores – why diversification is your strongest ally

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Equities

• US: US stock futures slipped as President Trump confirmed tariffs will take effect on August 1, extending trade uncertainty. Last week, the S&P 500 rose 1.7% and the Nasdaq 1.6%, both hitting record highs, while the Dow gained 2.3%. Investors are watching for earnings season catalysts. The rally is now broadening beyond big tech, with materials, financials, and energy sectors outperforming. Small caps (Russell 2000) are finally positive for the year. However, looming tariffs and stretched consumer discretionary valuations could weigh on sentiment. Tesla remains under pressure as Musk’s new political party grabs headlines.
• Europe: European stocks dropped sharply Friday, with STOXX 50 down 1% and STOXX 600 -0.5%, as US tariff risks linger. Losses were concentrated in banks, tech, and industrials—BBVA, Siemens, and ASML each fell around 2.5%. LVMH slipped 1.8% after China moved forward with EU brandy tariffs. German DAX and French CAC 40 dropped 0.6% and 0.8%. European firms exposed to China continue to lag as trade frictions persist. ECB officials flagged risks of missing inflation targets if the euro stays strong.
• UK: UK stocks finished flat last week, with the FTSE 100 little changed amid renewed tariff concerns and thin holiday trading. Homebuilders fell on weak demand and profit warnings, while miners like Glencore declined with lower copper prices. AstraZeneca bucked the trend, rising 1.3% on positive EU drug approval news. Overall, the UK market remains cautious ahead of the July 9 tariff deadline and ongoing fiscal concerns.
• Asia: Asian equities fell as Trump’s BRICS tariff warning unnerved investors. Hong Kong’s Hang Seng lost 0.5%, led by consumer and tech declines; Meituan, Techtronic, and AIA Group lagged. Chinese markets slipped, with the CSI 300 down 0.6%, as investors brace for key inflation data. Japan’s Nikkei and Australia’s ASX both dipped, with the RBA rate cut in focus. Weakness in the Chinese economy and new tariffs on EU goods also weighed on regional sentiment.

Volatility

• Market volatility remains subdued following the long weekend, with the VIX near 16.4 and ultra-short measures like VIX1D even lower. The front-month VIX futures hold around 18.3. Option markets expect a quiet session today, with S&P 500 options pricing in an expected move of ±36 points (about 0.6%). Unless the July 9 tariff deadline or earnings deliver surprises, investors seem comfortable keeping volatility low for now.

Digital Assets

• Crypto sentiment stayed firm over the weekend. Bitcoin held above $109k, close to its cycle highs. BlackRock’s IBIT ETF is steady near $62 despite low volumes. Ethereum hovered at $2,573, while ETHA retreated to $19.49 after last week’s rally as traders assess staking prospects. Broader altcoins traded mixed, but healthy on-chain activity signals retail engagement. In headlines, Elon Musk’s new political party pledged support for Bitcoin, pushing the asset further into the mainstream.

Fixed Income

• US Treasuries opened a tad firmer following Friday’s holiday with the 10-year yield dipping 2 basis point 4.33% amid renewed focus on trade tensions, but overall, they trade 10 basis point higher in the last week amid US economic data strength delaying rate cut expectations.
• The US Treasury will sell $58 billion in 3-year notes on Tuesday, $39 billion in 10-year notes on Wednesday, and $22 billion in 30-year bonds on Thursday.

Commodities

• Crude prices traded softer after a group of eight OPEC+ members announced a bigger-than-expected production increase from next month. The 548k b/d increase has accelerated the group's planned rollback of a 2.2m b/d cuts made in 2023, with a similar increase for September completing that rollback a year ahead of the original planned schedule, with the boost being justified by "a steady global economic outlook and current healthy market fundamentals." Traders had been expecting another increase; hence, the limited negative market reaction.
• Gold's current consolidation phase is extending into a twelfth week, with prices currently stuck in a USD 3,245 to 3,360 range. Today's softer price action is driven by a firmer dollar, while the risk of rising trade tensions may offer support. Also, focus on the US debt market with a number of auctions on tap this week.
• Chicago wheat futures have opened the week sharply lower, pressured by an accelerating U.S. winter crop harvest and big crops in the Black Sea region and western Europe. In addition, a cut in Russian export tax to zero amid ample supply also weighing.

Currencies

• The USD trades broadly higher in early Monday trading, and overall hanging onto a small weekly gain, with traders once again focusing on Trump’s trade war and expected announcements later today. Overall, trading remains subdued as the summer holiday reduces activity at trading desks. Biggest losers so far today being the AUD and NZD, both down 0.7%, and followed by the JPY which trades 0.35% lower at 145.

For a global look at markets – go to Inspiration.