Market Quick Take - 14 February 2025

Market Quick Take – 14 February 2025

Key points

• Equities: US stocks rise on tariff delay; Europe rallies on Ukraine peace talks; Siemens jumps on strong earnings
• Volatility: VIX falls to 15.10, put skew steepens, but market shows little fear
• Digital Assets: XRP +4.2%, SEC moves Grayscale XRP ETF forward; Bitcoin/Ethereum lag
• Currencies: USD trades weaker despite Trump tariff announcements. JPY firms on drop in US yields.
• Commodities: Gold rallies, still just short of all-time highs. Silver threatening key resistance.
• Fixed Income: US treasury yields reverse back lower, removing reaction to CPI spike from prior day.
• Macro events: Eurozone GDP Estimate, US Retail Sales, US University of Michigan Sentiment

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

Macro data and headlines

• President Trump announced plans for reciprocal tariffs on countries imposing tariffs, VAT, or trade barriers on the US, with implementation expected as early as April 2, the day after a report is due on US Trade Policy from the Office of the United States Trade Representative and other federal agencies. The Commerce Secretary indicated studies would be completed by April 1st before being implemented, thereby allowing time for negotiations between trade partners. Countries can avoid US tariffs by lowering their own tariffs against US goods. Trump noted the EU reduced its VAT on US goods to 2.5% from 10%. Additional tariffs will cover autos, steel, aluminium, and pharmaceuticals over and above the reciprocal tariffs with no exemptions.
• US Core PPI rose 0.3% MoM in January, matching forecasts and easing from 0.4% previously (though that figure was revised higher from 0.0%). Year-over-year, it rose 3.6%, above the 3.3% consensus and top estimate of 3.4%, with the prior revised up to 3.7% from 3.5%. The headline PPI rose 0.4% MoM in January versus 0.3% consensus, with the previous month's figure revised up to 0.5% from 0.2%. YoY, it maintained a 3.5% pace, exceeding the 3.3% consensus.
• US Initial jobless claims for the week ending February 8th fell to 213,000, below the expected 215,000, with the four-week average decreasing to 216,000. Continued claims dropped to 1.85 million, also below forecasts..

Macro calendar highlights (times in GMT)

• 1000 – Eurozone Q4 GDP Estimate
• 1330 – Canada Dec. Manufacturing Sales
• 1330 – US Jan. Retail Sales
• 1500 – US Preliminary Feb. University of Michigan Sentiment

Earnings events

• Today: Hermes, Safran, Enbridge, Moderna, Fortis, Rakuten

Next Week

• Monday: BHP Group
• Tuesday: Arista Networks, Medtronic, Entergy, EQT, Intercontinental Hotels Group,
• Wednesday: Rio Tinto, Analog Devices, HSBC, Carvana, Glencore, Vale, Garmin, Toast
• Thursday: Walmart, Booking Holdings, Airbus, Schneider Electric, Mercedes Benz, Mercado Libre, Nu Holdings, Block, Lloyds, Cheniere, Targa Resources, Fortescue, Cameco, Sprouts Farmers Market
• Friday: Constellation Energy, Standard Chartered

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

Equities

• US: US equities rallied, with the S&P 500 +1% and Nasdaq 100 +1.4%, as traders brushed off hotter-than-expected PPI inflation data and focused on optimism surrounding Trump’s delayed tariffs. Big tech outperformed, with Tesla (+3.2%) and Nvidia (+3.4%) leading gains. Apple (+2%) climbed ahead of its Feb 19 product launch. Despite inflation concerns, the 10-year Treasury yield dropped 9bps to 4.53%, as markets remain confident that the Fed's preferred inflation gauge (PCE) will come in softer. The dollar fell 0.7%, boosting risk assets.
• Europe: European stocks surged as DAX (+2.1%) and CAC 40 (+1.5%) climbed on renewed optimism for a Ukraine-Russia ceasefire, following Trump and Putin’s direct call. Hopes for peace sparked a rotation into European equities, particularly industrials and consumer stocks. Siemens (+7.3%) soared after strong earnings, beating expectations on net income and revenue. Defense stocks such as BAE Systems (+3.1%) and Rheinmetall (+4%) also gained, anticipating increased military spending. In the UK, the FTSE 100 underperformed (-0.5%), pressured by BAT (-9.3%) and Unilever (-6.2%) after weak earnings and cautious outlooks.
• Asia: Asian markets extended gains, with Hang Seng (+2.5%) and China’s CSI 300 (+0.7%) rallying on hopes that Trump’s reciprocal tariffs might be watered down. AI-related optimism boosted sentiment, as Apple announced plans to integrate Alibaba’s AI in China. Japanese stocks lagged, with Topix (-0.1%), as chip-heavy Taiwan saw weakness (Taiex -0.9%) amid concerns over US trade policy. Meanwhile, the Indian Sensex rebounded, breaking an eight-day losing streak.

Volatility

The VIX fell to 15.10 (-0.79 pts), reflecting easing market uncertainty. SPX realized volatility declined to 10%, with limited tariff-related risk premium. Put skew steepened, suggesting some hedging activity, but remains near its five-year median. Despite geopolitical uncertainties, traders appear unconcerned about sustained volatility spikes.

Digital Assets

XRP outperformed (+4.2%), after the SEC acknowledged Grayscale’s ETF filing, fueling speculation of institutional adoption. Bitcoin (-1.4%) at $96,306 and Ethereum (-1.1%) at $2,654 lagged, as crypto investors reassess risk appetite. Meanwhile, Solana (+0.2%) and Binance Coin (+1.5%) held steady. Crypto stocks also saw volatility, with Robinhood rallying on surging crypto revenue.

Fixed Income

• US Treasuries rallied hard yesterday, reversing all of the reaction to the hot US CPI print the prior day and sending the US 10-year Treasury benchmark back to the pivotal 4.50% area.
• European sovereign bonds are opening with a strong bid, more than reversing out the prior day’s sell-off as the German 10-year Bund yield is already down some 6 basis points this morning in early trading, with a yield of 2.42%.

Commodities

• Gold rallied to within striking distance of the all-time highs above 2,942, trading a few dollars below that level this morning, while silver jumped to new local highs well clear of the sticky 32.50 area that was holding it back previously and trading near 33.0 per ounce.
• Both WTI and Brent crude bounced back after testing below local support levels, with April WTI about a dollar off the lows, trading 71.25, while April Brent trades 75.16.
• US copper prices continue to diverge from London equivalents, jumping to new multi-month highs above 4.85/lb. for the May contract, while London copper remains rangebound.

Currencies

• The reversal of the reaction to the hot US CPI print on Wednesday in the treasury markets saw an equivalent reversal in USDJPY, which backed down below to as low as 152.50 this morning after a high of 154.79 yesterday. JPY crosses were firmer as the USD was weak across the board.
• The weak US dollar despite Trump’s tariff announcements is seeing key USD pairs testing and even breaking important levels, including EURUSD, which broke above local resistance of 1.0442, which has it eyeing the key 1.0500-1.0600 zone next if the rally continues. Elsewhere, AUDUSD rallied above local resistancenear 0.6300, the highs of the year at 0.6331 the next level in focus. The RBA meets next Tuesday and is expected to cut the policy rate.

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