Global Market Quick Take Europe - 30 January 2025

Global Market Quick Take: Europe – 30 January 2025

Key points

• Equities: Fed holds rates; Nvidia, Microsoft down; ASML, Schneider up; Apple earnings in focus
• Volatility: VIX stable; elevated expected moves; PCE inflation report key
• Digital Assets: Bitcoin rises; Tesla marks up BTC; Trump’s policies keep crypto on edge
• Currencies: USD largely flat post-FOMC, JPY firms
• Commodities: Coffee hits fresh record highs, Gold and crude steady
• Fixed Income: US yields nearly unchanged after FOMC, European yields rise
• Macro events: ECB Rate Announcement, Eurozone Q4 GDP estimate, US Q4 GDP estimate

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

Macro data and headlines

• The Trump administration said yesterday that it is offering some 2 million federal workers the option to accept a buyout in a “deferred resignation” program if they quit their jobs by February 6. This comes in the wake of a demand that all federal workers return to a five-days-a-week in-office work schedule. The administration expects some 10% of the workers might accept the proposal.
• The US Federal Reserve kept the policy rate unchanged at the 4.25-4.50% range as expected after its FOMC meeting yesterday and indicated it was in no rush to make any further rate cuts. Fed Chair Powell indicated in the press conference that the rate would be held unchanged until the FOMC has a chance to assess the impact on inflation of Trump’s policies on tariffs, deportation of illegal immigrants and deregulation and tax cuts. Powell said that Trump administration policies are ”not for us to criticize, or to praise.” Rate cut odds dropped very slightly for coming meetings, with the US 2-year benchmark yield ending the day 2 basis points higher.
• Trump lashed out at the Fed in a social media post, saying “inflation would never have been a problem” had the Fed “spent less time on DEI, gender ideology, Green energy and fake climate change.” In the FOMC meeting press conference before Trump made his opinion known, Fed Chair Powell said that he would not comment on anything that the president has said on Fed policy when questioned about previous Trump comments suggesting the Fed should cut the policy rate.
• The Bank of Canada sliced another 25 basis points from its policy rate after a string of 50 basis point cuts, taking the rate to 3.00% with markets divided on whether the bank will continue to cut at the next meeting in March or pause before cutting in April or June. BoC Governor Tiff Macklem said he was more concerned about business investment as the US is threatening tariffs more than impacts from the lower yields relative to the US when observing the very weak Canadian dollar.

Macro events (times in GMT)

Spain Flash Jan. CPI (0800), Germany Q4 GDP estimate, UK Dec. Consumer Credit (0930), Eurozone Q4 GDP estimate (1000), Eurozone Confidence Surveys (1000), ECB Rate Announcement (1315), US Q4 GDP estimate (1330), US Weekly Initial Jobless Claims (1330), ECB Press Conference (1345), EIA Natural Gas Storage Change (1530), Japan Jan. Tokyo CPI

Earnings events

• Today: Apple, Visa, Mastercard, Roche, Blackstone, Thermo Fisher Scientific, Shell, Caterpillar, Comcast, UPS, ABB
• Friday: ExxonMobil, Abbvie, Chevron, Samsung, Novartis, Eaton

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

Equities

• US: US equities closed lower as the Fed held rates steady, signaling no urgency to cut amid persistent inflation risks. The S&P 500 fell 0.47%, Nasdaq lost 0.51%, and Dow declined 0.31%, weighed down by tech losses. Nvidia (-4.1%) and Microsoft (-1.1%) extended declines following the AI-driven rout, while Tesla (+4% after hours) rebounded despite weak earnings. The Fed acknowledged inflation remains elevated, and Trump’s looming trade tariffs added to market uncertainty. Futures are steady as investors await Apple’s earnings and Friday’s PCE inflation report.
• Europe: European stocks hit new highs, with the STOXX 50 up 0.6% and the STOXX 600 up 0.5% as strong earnings offset growth concerns. ASML jumped 5.8% after beating Q4 estimates, while Schneider (+4.6%), Siemens, and SAP led tech gains. LVMH sank 5% on weak H2 results. ECB rate decision today, with markets expecting a 25bps cut, following the Fed’s hold. Traders will also watch Apple’s earnings and US GDP data for further market direction.
• Asia: Asian markets traded mixed, with Japan’s Nikkei flat as SoftBank (-1%) continued to slide after reports it plans a $25B OpenAI investment. Tech stocks remained pressured amid lingering DeepSeek AI concerns, while Advantest (+3.9%) surged on strong earnings. Australia’s ASX hit a record high, buoyed by rate cut expectations. Trading volume was thin due to Lunar New Year holidays across China, Hong Kong, Taiwan, and South Korea.

Volatility

Volatility held steady, with the VIX at 16.56 (+0.91%), reflecting a lack of major surprises from Powell’s Fed comments. Market attention shifts to Friday’s PCE inflation data, while expected market swings remain elevated. Options pricing suggests an SPX move of ±49.66 points (0.82%) and NDX ±292.57 points (1.37%) today. Earnings from Apple and macro data will drive the next volatility wave.

Digital Assets

Bitcoin rallied 1.45% to $105,186, tracking risk-on sentiment post-Fed, while Ethereum (+2.4%) and Solana (+4.78%) outperformed. Tesla’s Bitcoin holdings jumped in value due to new accounting rules, boosting its Q4 net income by $600M. Crypto investors remain cautious over Trump’s unclear regulatory stance and upcoming US trade tariffs. Meanwhile, trading volume is rising, signaling potential near-term BTC volatility.

Fixed Income

• The markets tried to read a slightly more hawkish message from the Fed yesterday, with short rates rising several basis points on the release of the FOMC statement as the unemployment rate was seen as “stabilized at low level in recent months” after December’s description that the rate has “moved up, but remains low”, but by the end of the day, the reaction had been erased and rates fell back to where they came from, with the 10-year benchmark yield ending the day unchanged just above the key 4.50% level.
• European rates continued to rise yesterday, with the German Bund yield ending the day two basis points higher at 2.58%, the highest daily close since the week before last, in which the benchmark yield peaked out at 2.65%.

Commodities

• Arabica coffee, one of the world’s most traded commodities, hit anotherecord high of USD 3.685 a pound due to poor weather in Brazil where farmers are holding on to beans, hoping for even higher prices amid concerns over shrinking global stockpiles. The most active contract traded in New York trades up around 90% in the last year, and 14.6% this month alone.
• Gold prices saw a limited reaction to Powell’s expected rate cut pause, with prices sitting just 30 dollars below the October record. Instead, the focus remains on Trump’s economic plans for tariffs and immigration, and how they might impact growth and inflation. Silver meanwhile saw renewed strength relative to gold after the XAUXAG ratio once again got rejected above 91, leading to a drop to the current 89.5
• Crude’s continued drift lower has seen prices retrace half their strong December to early January gains as the market struggle to determine the eventual impact on supply and demand from several moving parts, including Russian and Iranian sanctions lowering exports, OPEC+ increasing production in April, and US trade policies regarding Canada and Mexico, two key exporters of crude to the US.
• EU gas prices jumped to a 15-month high due to unplanned capacity restrictions in Norway and forecasts for colder weather. Storage sites across the region are only 55% full, compared with 72% a year ago.

Currencies

• The US dollar was largely sideways on the back of the FOMC meeting after some minor churning as rate cut odds ended the day slightly lower after an attempt to read the new FOMC statement as slightly hawkish – a reaction that was erased later in the day.
• In the Asian session, USDJPY dropped on JPY firmness ahead of a Bank of Japan speech which did little to deter sellers after the Deputy governor talk about additional rate hikes if price forecasts are realised.