Market Quick Take - 27 February 2025

Market Quick Take – 27 February 2025

Key points

• Equities: Nvidia beats estimates but remains volatile; Trump confirms 25% EU auto tariffs; AI optimism supports semiconductors
• Volatility: VIX dips to 19.10; markets await GDP, jobless claims data; tariff risks persist
• Digital Assets: Bitcoin drops below $85K, ETF outflows accelerate, market panic intensifies
• Currencies: US dollar firms on latest Trump tariff threats
• Fixed Income: US treasury yields drop further as US growth concerns mount
• Commodities: Gold in correction mode, crude plunges despite supply concerns
• Macro events: US Jobless Claimes, UK Prime Minister Starmer to meet US President Trump

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

Macro data and headlines

• US President Trump said during his first cabinet meeting of his second term as president that he would impose 25% tariffs on the EU late yesterday, as he said the bloc “was formed to screw the United States”.,
• Trump said yesterday that the 25% tariffs threatened against Canada and Mexico would take effect on April 2, almost a month beyond the original 30-day delay of the tariffs announced at the end of February, although Commerce Secretary Lutnick noted that this delay would only be possible if Canada and Mexico address Trump’s demands on disrupting the trade in the illegal drug fentanyl.
• US President Trump said that US oil giant Chevron’s permit to produce and export oil to the US will be terminated this week, a key financial lifeline for the country. Trump linked the decision for the insufficiently democratic conditions at last summer’s election and because Venezuela is not moving quickly enough to repatriate illegal immigrants to the US.
• Sales of new single-family homes in the US fell 10.5% in January 2025 to an annual rate of 657,000, below expectations of 680,000. This was the lowest in three months, with high mortgage rates and severe weather, especially in the South, reducing demand.
• US Secretary of State Rubio said yesterday that having a relationship with Russia is important to avoid cutting off the country such that it becomes completely dependent on China. Some are calling the US reversal on its attitude toward Russia a “reverse Nixon”.

Macro calendar highlights (times in GMT)

• UK Prime Minister Starmer to meet US President Trump today
• 1000 – Eurozone Feb. Confidence Surveys
• 1230 – ECB Meeting Minutes
• 1330 – US Q4 GDP revision
• 1330 – US Jan. Durable Goods Orders
• 1330 – US Weekly Initial Jobless Claims

Earnings events

• Today: Axa, Dell, EOG Resources, Autodesk, Eni, Swiss Re, HP, Warner Brothers
• Friday: BASF, Holcim

Next week

• Tuesday: Crowdstrike, Autozone
• Wednesday: 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: Markets mixed as Nvidia stabilizes post-earnings, Trump tariffs weigh
  The S&P 500 gained 0.01%, while the Nasdaq 100 climbed 0.26%, breaking a four-day losing streak. The Dow Jones dropped 0.43% amid trade tensions, with President Trump announcing a 25% tariff on EU autos and reaffirming upcoming tariffs on Mexico and Canada (April 2 deadline). Nvidia reported strong earnings, with revenue up 78% YoY to $39.3B, exceeding expectations. However, shares fluctuated post-market. Salesforce fell 5% after weak guidance. The Philadelphia Semiconductor Index (SOX) rose 2.09%, reflecting AI optimism.
• Europe: European stocks extend gains as earnings drive sentiment
  The STOXX 50 jumped 1.5% to 5,530, nearing record highs, while the STOXX 600 set a new all-time high at 560. Strong earnings fueled optimism, with AB InBev (+8.7%) and Munich RE (+4.8%) leading gains. The DAX rose 1.7% to 22,794, benefiting from Siemens Energy (+8.15%) and Fresenius (+6.62%). The FTSE 100 gained 0.72%, boosted by copper miners (Antofagasta, Anglo American, Fresnillo, Glencore) and banks, with Lloyds (+4.6%) outperforming after an upgrade. BP (-1.37%) fell after announcing a strategic reset, including increased oil & gas investment and a Castrol business review.
• Asia: Hong Kong stocks slip after three-year highs as profit-taking kicks in
  The Hang Seng Index fell 0.48%, pulling back from a three-year high after profit-taking in tech and consumer stocks. Hong Kong Exchanges & Clearing (+2.3%) led gains after strong earnings, supported by higher trading revenues. Meanwhile, China is set to inject 400 billion yuan into state banks like Agricultural Bank of China and Bank of Communications to bolster capital buffers. Investors are watching developments around China’s 400 billion–1 trillion yuan capital injection plan and its potential spillover into Asian equities.

Volatility

Markets eye Nvidia fallout, GDP data, and tariff risks. The VIX fell to 19.10 (-1.70%), indicating lower volatility despite trade tensions and Nvidia’s earnings. VIX futures dipped to 17.87 (-1.45%), while S&P 500 (+0.52%) and Nasdaq futures (+0.59%) signal a higher open. Market focus shifts to US Q4 GDP data (2.3% forecast) and Initial Jobless Claims (222K expected), which could drive short-term swings. Tariff uncertainty remains a wildcard for sentiment, with investors assessing potential countermeasures from the EU, Mexico, and Canada.

Digital Assets

Bitcoin plunges below $85K amid ETF outflows, panic selling. Bitcoin tumbled to $83,330, extending its correction as ETF outflows soared—BlackRock’s IBIT saw record $420M in withdrawals. Market-wide liquidations exceeded $768M, wiping out 185,000+ traders. The crypto Fear & Greed Index hit 10 (extreme fear), the lowest since 2022. Ethereum fell 5% to $2,300, while Solana, Binance Coin, and XRP also posted sharp losses. Analysts caution against panic selling, citing Bitcoin’s historical tendency for 30% corrections in bull markets. However, Trump’s trade policies and macro risks are weighing heavily on sentiment.

Fixed Income

US treasury yields headed lower still, with the US 10-year benchmark testing just below the 4.25% level, the lowest since a dip to 4.13% in December of last year, perhaps as US growth fears wave and as US Treasury Secretary Bessent has declared that he is targeting a lower 10-year yield, while the Fed is nervous about the debt ceiling issue and may pause its quantitative tightening to avoid any pressure on the US treasury market .

Japanese government bond yields rebounded sharply the gap lower to open trading on Tuesday after the long weekend, with the 10-year JGB yield benchmark tacking on another few basis points before retreating back to 1.39% (versus Wednesday low of 1.32% and the cycle high on Friday of 1.466%)

Commodities

Gold trades below 2,900 per ounce this morning, as the 2,890 area is being tested for the third time in recent days. A break could lead to a test lower, with the first notable area of support coming in near 2,790, the last major high from last October.

April WTI crude oil dropped to new lows for the year, trading below USD 69 per barrel and April Brent dropped below USD 73/barrel, even as supply concerns weigh on pressure on Iran from the US and OPEC+ production delays and on Trump’s moves against importing oil from Venezuela.

Currencies

• The euro made another attempt above 1.0500 versus the US dollar yesterday, but backed off overnight as Trump threatened 25% tariffs against the EU at his first cabinet meeting yesterday.
• The US dollar was broadly firmer, with USDCAD trading above 1.4350 this morning, AUDUSD limping back below 0.6300 in what looks like the cementing of a reversal of the recent upside breakout attempt above 0.6300-30.
• The JPY has been unable to capitalise on a plunging US-Japanese bond yield spread, with 148.65 remaining the key chart point.