Market Quick Take - 10 February 2025

Market Quick Take – 10 February 2025

Key points

• Equities: Amazon -4%, DAX hit by Porsche slump, China AI rally offsets broader Asia weakness
• Volatility: VIX +6.71%, S&P 500 expected move 1.54%, Nasdaq 2.06%, VIX futures easing
• Digital Assets: BTC recovered to $97K, crypto stocks mixed, Fear & Greed Index 43, Trump's tariffs could impact mining sector
• Currencies: DXY rose to 108.2 amid tariff threats and delayed cuts
• Commodities: Gold near record high, oil up on Iran sanctions, copper, iron ore rise amid supply & trade fears
• Fixed Income: 2-year Treasury yield hits 2-week high
• Macro events: Trump’s tariffs, China retaliates, Fed’s Powell testimony, US CPI on Wednesday, earnings-heavy week


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

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Macro data and headlines



• Trump’s Tariff Escalation & Retaliation Risks – President Trump’s 25% tariffs on all steel and aluminum imports take effect today, fueling global trade tensions. China’s retaliatory tariffs on US goods have also kicked in, while EU officials warn of swift countermeasures. Markets are weighing whether these moves are bargaining tactics or a structural shift in trade policy.
• Fed Chair Powell’s Testimony & Inflation Data – Powell’s Congressional testimony (Tuesday & Wednesday) will be closely monitored for rate policy guidance, especially with US CPI data due Wednesday. A hot inflation print could disrupt expectations of two Fed rate cuts in 2025, influencing market sentiment and rate-sensitive assets.
• Market Volatility & Policy Uncertainty – Investors are navigating rising geopolitical risks, trade uncertainty, and central bank policy shifts. With the ECB’s Lagarde and the BoE’s Mann speaking today, European markets will react to any new monetary policy signals amid ongoing economic headwinds.

Earnings events

• Today: McDonalds, Vertex
• Later this week: Hermes, Coca-Cola, Cisco Systems, Nestle, Siemens, S&P Global, Shopify, Applied Materials, Unilever, Sony, EssilorLuxottia, Applovin, Deere & Company, Palo Alto Networks, Softbank, AirBnB, DoorDash, Coinbase, Adyen, Robinhood, Siemens Energy

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

Equities

• US: US equities ended last week on a weak note as investors reacted to renewed trade war concerns and inflation worries. The S&P 500 (-0.95%), Nasdaq (-1.3%), and Dow (-443 pts) all declined Friday. Reports of new 25% tariffs on steel and aluminum imports from President Trump stoked market anxiety. Amazon tumbled 4% after weak revenue guidance, while Palantir surged 34% post-earnings. US futures rebounded Monday, with S&P 500 +0.25% and Nasdaq 100 +0.47%, as traders await Fed Chair Powell's testimony and CPI data this week. Volatility is elevated, with the VIX at 16.54 (+6.71%).
• Europe: European stocks softened on Friday following weak US jobs data and disappointing corporate earnings. STOXX 50 -0.3%, DAX -0.61%, and CAC 40 -0.4% all declined. German industrial production fell 2.4%, marking its sharpest drop in five months. Porsche AG plunged 7.3% after impairment announcements, while L’Oréal dropped 4% on sluggish China demand. Banco Sabadell fell 1% despite strong earnings. However, Vinci (+2.4%) outperformed on solid results. European futures are holding steady Monday, with investors bracing for potential EU retaliation against Trump’s new tariffs.
• Asia: Asian markets had a mixed session, weighed down by Trump’s tariff move but supported by strong gains in China’s AI sector. Hang Seng +1.4%, Shanghai Composite +0.3%, while Japan’s Nikkei -0.2% and South Korea’s KOSPI -0.1% declined. AI stocks surged in China, with Cambricon Technologies +6.2% and CloudWalk Technology hitting its 20% daily limit. Chinese telecom giants also gained after announcing AI collaborations. China’s inflation rose to 0.5%, easing deflation concerns. Steel and mining stocks slumped in Japan, South Korea, and Australia following Trump's 25% metal tariffs.

Volatility

The VIX surged to 16.54 (+6.71%) Friday as markets absorbed weaker-than-expected jobs data and tariff threats. VVIX spiked 4.88%, indicating heightened demand for volatility hedges. The options market is pricing in considerable moves, with a 1.54% expected move in the S&P 500 and a 2.06% move in the Nasdaq 100 this week. However, VIX futures are down -2.28% Monday, suggesting a potential easing of immediate market fears.

Digital Assets

Bitcoin briefly dipped below $94,000 after Trump’s tariff announcement but rebounded to $97,003 (+0.55%). Ethereum (+0.08%) and Solana (+1.02%) remained steady. Crypto-related stocks had a mixed reaction, with Coinbase (+1.52%) and Marathon (-0.18%) diverging. The Crypto Fear & Greed Index dropped to 43, signaling persistent uncertainty. Markets are monitoring potential crypto policy impacts as Trump hints at broader tariffs on semiconductors and energy, which could indirectly affect Bitcoin mining operations.

Fixed Income

Treasury futures declined as attention shifted from the soft January jobs report to a strong upward revision and higher-than-expected earnings, with the unemployment rate falling to 4%. This led to a selloff, leaving yields near session lows and widening SOFR swap spreads. Treasury yields were cheaper by 5 to 6.5 basis points, with the 10-year yield at about 4.48%. Canadian bonds underperformed, trading roughly 5.5 basis points cheaper than Treasuries, influenced by block sales in 10-year note futures.

Commodities

Gold surged to $2,909 (+0.77%), nearing record highs, driven by safe-haven demand as Trump’s tariff policy escalated global trade tensions. Central banks continued accumulating gold, further supporting prices. Oil (WTI $71.40, Brent $75.05) edged higher amid new US sanctions on Iranian crude exports, while copper hit a four-month high ($4.58/lb) as traders anticipate supply disruptions from Chile. Iron ore jumped 0.9% to $107.25, reflecting renewed trade uncertainty.

Currencies

• The dollar index (DXY) increased to 108.2 following President Trump's tariff threats against countries with trade levies on the US. Fed rate cut expectations were delayed due to strong wage growth and low unemployment.
• EUR dropped below $1.04 due to a widening US-Europe interest rate gap. Strong US jobs data boosted the dollar, while ECB rate cuts and potential easing pressured the euro. Concerns over US tariffs and deflation may lead to the ECB rate falling to 1.87% by December. 
• GBP steadied at $1.24 after the Bank of England cut rates and growth forecasts, raising inflation concerns. Traders expect more easing. US markets ignored the jobs report, aligning with the Fed's stable rate outlook. 
• CAD rose to 1.43 against USD from a 22-year low, driven by strong labor data reducing rate cut urgency. Unemployment fell to 6.6%, but the Ivey PMI dropped to 47.1, supporting policy easing expectations. The BoC plans to resume asset purchases in March. 
• JPY, which usually benefits from risk-averse sentiment, was affected by Trump's tariff discussions focusing on Japan. Trump seeks to eliminate the trade deficit with Japan, potentially using tariffs to achieve this goal, leading USDJPY to weaken to approximately 151.30. 
  (currency news copied from the Quick Take Asia edition, published earlier today)
  

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