Market Quick Take – 4 April 2025

Market drivers and catalysts

• Equities: Trump tariffs hit stocks hard; $2.4T wiped; EU, Asia follow
• Volatility: VIX hits 30; short-term vols spike; Powell in focus
• Digital Assets: Bitcoin stable; XRP gains; crypto stocks plunge
• Currencies: CHF and JPY are safe havens, USD stabilizing after initial shock move lower
• Fixed Income: Global sovereign bond yields in heavy demand on collapse in risk sentiment as markets position for recession risks.
• Commodities: Silver and copper slump lead biggest one-day loss since 2022
• Macro events: US Mar. Nonfarm Payrolls Change, US Mar. Unemployment Rate, US Fed Chair Powell to speak

Saxo’s Quarterly Outlook has been published, and can be accessed on the SaxoTraderGO here or web here

Macro data and headlines

• US ISM Services PMI fell to 50.8 in March 2025 from 53.5 in February, below the forecast of 53, marking the weakest expansion since last June. New orders, inventories, and supplier deliveries slowed, while employment contracted sharply to 46.2 from 53.9 in Feb. Backlogs of orders showed contraction again. Production rose and price pressures eased.
• US Feb. Job Cuts rose 205% year-on-year in March as job cuts totalled 275,000, the highest number since the outbreak of the pandemic in 2020.
• Continuing jobless claims in the US rose by 56,000 to 1,903,000 in the week ending March 22, the highest since November 2021, surpassing the forecast of 1,860,000, indicating challenges for unemployed individuals re-entering the workforce. Meanwhile, initial jobless claims fell by 6,000 to 219,000, below expectations of 225,000.
• In February 2024, household spending in Japan decreased by 0.5% year-on-year, contrasting with a 0.8% rise in January and below estimate of –0.8%. This marked the first decline since November and was better than market expectations of a 1.7% decrease.
• Canadian PM Carney announced 25% tariffs on non-compliant US vehicle imports under the USMCA and vowed to contest US tariffs until removed. He affirmed existing retaliatory tariffs and promised a strong response to any new US tariffs, emphasizing the need to reset relations with the US

Macro calendar highlights (times in GMT)

1230 – US Mar. Nonfarm Payrolls Change
1230 – US Mar. Unemployment Rate
1230 – US Mar. Average Hourly Earnings
1230 – Canada Mar. Employment Data
1525 – US Fed Chair Powell to speak on economic outlook

Earnings events

Next week:

• Wednesday: Delta Airlines
• Thursday: Tesco, Progressive Corporation
• Friday: JP Morgan, Wells Fargo, Morgan Stanley, Blackrock, Bank of New York Mellon, Fastenal

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

• US stocks suffered their worst day since 2020 after Trump unveiled sweeping tariffs: a 10% base rate on all imports, with higher levies for key trading partners. The S&P 500 plunged 4.84%, wiping out $2.4 trillion in market value, while the Nasdaq 100 tumbled 5.41% and Dow lost 3.98%. Apple (-9.2%), Nvidia (-7.8%), and Amazon (-9%) led tech losses. Retailers and banks also sold off, with Nike and Dollar Tree down 13%+. A slight rebound in futures suggests investors await today's payrolls and Powell’s comments for clarity.
• European equities plunged in sync, as reciprocal tariffs hit sentiment. DAX -3.0%, CAC 40 -3.3%, FTSE 100 -1.55%, and Stoxx 50 -3.7%, marking the worst session since July 2024. Tariffs on EU cars (25%) and broader 20% levies sparked steep losses in autos (Adidas -11.7%), logistics, and banks. Swiss stocks also fell 2.5% (UBS -8.3%, Logitech -16.5%).
• In Asia, Japan’s Nikkei dropped 2.5% and Australia’s ASX 200 hit 8-month lows. Markets in China and Hong Kong were closed, but South Korea's KOSPI -1.02% continued its slide after President Yoon was officially removed from office.

Volatility

The VIX surged 39.56% to 30.02, its highest level since August, reflecting rising fear after Thursday’s sell-off. Short-term volatility exploded, with VIX1D +26.8% and VIX9D +40.4%, signaling heightened anxiety into today’s payrolls report and Powell speech. While VX futures (VX1) held steady, intraday swings remain likely. In Europe, VDAX spiked 13%, mirroring the DAX’s 3% drop, with DAX options volume up 44% and skew slightly elevated—implying continued hedging activity, but not full-blown panic.

Digital Assets

Crypto held relatively firm despite the global risk-off mood. Bitcoin +0.03% to $83,191, while Ethereum -0.62%, and XRP +0.36%. XRP outperformed after Coinbase filed to launch XRP futures, citing its liquidity and regulatory clarity after Ripple’s partial legal win. Crypto-related stocks plunged—Coinbase (-6.66%), MicroStrategy (-9.76%), and miners like Marathon and Riot fell nearly 10%. Traders are watching if the Fed might ease sooner, which could rekindle crypto appetite—but for now, caution reigns amid recession fears.

Fixed Income

• Global yields collapsed on the sell-off in risky assets in the wake of the latest US tariff announcement as investors positioned not only for the risk of a US recession, but a global one. In the US, the 2-year yield benchmark has collapsed 22 basis points since Wednesday, trading at 3.64% this morning as the market moves to price four Fed rate cuts by year-end. The 10-year treasury yield benchmark has fallen less since Wednesday as the US yield curve steepened – dropping some 13 basis points since Wednesday and trading just below 4.0% this morning.
• Elsewhere in the world, sovereign bonds were strongly bid as the market moves to price more central bank easing. The German 2-year Schatz dropped 9 basis points to close at 1.95% yesterday, close to multi-year lows, while the UK 2-year Gilt yield swooned 16 basis points to close at 4.01%. In Japan, the volatility in JGB’s accelerated as the market moved to remove anticipation of rate hikes from the BoJ – the two-year JGB yield has fallen over 20 basis points since Wednesday, trading this morning at 0.63%, while long bonds in Japan were in heavy demand, with the 10-year JGB collapsing to 1.21%, some 26 basis points lower than Wednesday’s close.
• US Junk Bonds came under heavy pressure as the risk-aversion in equities spread to riskier debt as well. A Bloomberg measure of the spread of high yield debt to US treasuries widened dramatically to 387 basis points – a 52 basis point move in one day from the prior day’s close.

Commodities

• Commodity prices experienced their largest drop in over two years after Trump's all-out tariffs war raised concerns about a recession, and global demand. The Bloomberg Commodity Index fell 2.5% on Thursday, its biggest one-day decline since December 2022, overall leaving the index down around 2% on the week, led by losers on in silver, copper, and aluminium, and only partly offset by small gains in wheat, coffee, and natural gas.
• Silver’s dramatic slump extended overnight, and with gold holding steady around USD 3,100, supported by the dollar and yield slump, the gold-silver ratio has surged above 98, the highest since 2020. The selloff was led by COMEX futures, after the risk of tariffs on imports faded, leading to speculation that a recent flow of silver into COMEX-monitored vaults may now reverse, adding supply to a market already weakened by recession concerns.
• Crude prices slumped following a Trump/OPEC+ double whammy, with tariff-related recession risks hurting demand while OPEC+, in a surprise move, decided to accelerate a planned May production hike. WTI trades near levels where US producers may struggle to stay profitable on new production, and the move from OPEC+ signals a willingness to endure short-term price pain to reclaim lost market shares.

Currencies

• The US dollar was under broad and significant pressure yesterday in the wake of the Trump tariff announcements as the market priced in more Fed rate cuts, but the situation has become more nuanced since then. While EURUSD continues to trade near 1.1100 this morning, the AUDUSD pair rolled over badly overnight, erasing yesterday’s rally and trading near recent lows.
• CHF and JPY have served as safe havens as USDCHF dropped from above 0.8800 before the Trump tariff announcements to 0.8550 this morning, while USDJPY below 146.00 and JPY crosses are under pressure as the collapse in global bond yields increases the JPY’s appeal.

For a global look at markets – go to Inspiration.