Market Quick Take - 12 March 2025

Market Quick Take - 12 March 2025

Market drivers and catalysts

• Equities: US stocks decline as Trump hikes Canada tariffs; Europe slumps
• Volatility: VIX at 26.77, Euro Stoxx volatility at 7-month high
• Digital Assets: Crypto markets corrected slightly this morning
• Currencies: JPY weakens on yield rebound. EURUSD advance retreats slightly
• Fixed Income: New dramatic steepening in European yield curve as 13-year highs in Bund yields eyed.
• Commodities: Silver underpinned by copper rally, oil rebounds on Iran supply risks
• Macro events: Bank of Canada meeting, US Feb. CPI, US 10-year Treasury Auction

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

Macro data and headlines

• US tariffs of 25% on all steel and aluminium imports went into effect this morning, with President Trump backing off the threat of doubling the tariff against Canada after the Canadian province of Ontario cancelled a 25% export duty on electricity to the US. Canada is the largest exporter of both steel and aluminium to the US.
• The EU this morning enacted “swift and proportionate countermeasures” against the US after the latter imposed tariffs on EU steel and aluminium exports, to be applied to US imports worth up to EUR 26 billion. They are meant to be in place from early to mid April.
• Ukraine has accepted a US proposal for a 30-day truce with Russia as part of a deal to lift the freeze on military aid and intelligence, and includes a pause in hostilities, prisoner swaps, and a deal on Ukraine's mineral development. The US will now take the proposal to Russia's President Vladimir Putin to seek his agreement on a proposal
• Job openings in the US rose by 232,000 to 7.74 million in January 2025, exceeding the expected 7.63 million. Retail trade, finance and insurance, and health care and social assistance saw notable increases, while professional and business services experienced a decline.
• Bank of Japan’s Ueda stated that he is not concerned about the level of Japanese Government Bond yields, suggesting that “the rising trend since last year reflects the market’s views on the economy and inflation, or shifts in interest rates overseas”.

Macro calendar highlights (times in GMT)

0845 – ECB’s Lagarde to speak
1230 – US Feb. CPI
1430 – US Weekly DoE Crude Oil and Product Inventories
1430 – Bank of Canada Governor Tiff Macklem press conference
1700 – US 10-year Treasury Auction

During the day: OPEC’s Monthly Oil Market Report

Earnings events

• Today: Adobe, Inditex, Rheinmetall, Lennar
• Thursday: Docusign
• Friday: BMW, Daimler Truck

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

Equities

• US: US stocks extended their selloff on Tuesday as trade tensions escalated. The S&P 500 fell 0.76%, the Dow lost 1.14% (-478 points), and the Nasdaq slid 0.18%. Trump's announcement to double tariffs on Canadian steel and aluminum to 50% spooked markets, though Ontario Premier Doug Ford later paused a planned surcharge on US electricity imports. Industrials, consumer staples, and healthcare led losses, with Delta Air Lines (-7%), Disney (-5%), and Airbnb (-5%) among the worst performers. Tech was hit as Apple (-2.9%), Alphabet (-1.1%), and Oracle (-3.1%) fell. Investors await the CPI report for clarity on inflation and Fed policy.
• Europe: European equities slumped to a one-month low as Trump's tariff threats on Canada sparked fears of broader economic damage. The STOXX 50 lost 1.7%, and the STOXX 600 fell 1.8%, with autos, banks, and industrials among the worst-hit sectors. Stellantis (-5%), Mercedes-Benz (-2.5%), and Volkswagen (-3%) declined as investors feared supply chain disruptions. European indices are set to rebound today on Ukraine ceasefire hopes, with DAX futures up 195 points and FTSE 100 futures +25 points. Earnings from Inditex, Puma, and Porsche are in focus.
• Asia: Asian markets were mixed amid trade uncertainty. Japan’s Nikkei gained 0.3%, while South Korea’s KOSPI jumped 1.6% on strong tech performance, with Samsung (+2.1%) and SK Hynix (+4.5%) leading gains. Hong Kong’s Hang Seng (-1.58%) initially dropped but recovered after Citigroup upgraded Chinese stocks on AI growth potential. Kuaishou Tech (+5.2%) and Semicon Manufacturing (+3.1%) led the rally. Australian and Malaysian stocks underperformed as Trump ruled out tariff exemptions, adding pressure on commodity-reliant economies.

Volatility

Volatility remains elevated ahead of today’s CPI report (13:30 GMT+1). The VIX stands at 26.77, reflecting ongoing market uncertainty. Short-term volatility indicators, such as the VIX9D (-7.25%), signal heightened near-term risks as traders position for inflation data and potential Fed policy shifts. VIX futures remain inverted, suggesting uncertainty but no full-blown panic. Meanwhile, Euro Stoxx volatility surged to a 7-month high, tracking equity declines as trade tensions weighed on sentiment.

Digital Assets

Crypto markets corrected slightly after recent highs. Bitcoin (BTC) fell 1.37% to $81,747, while Ethereum (ETH) dipped 0.61% to $1,910. Solana (SOL) slid 1.7% to $123.16, but XRP (XRP) rose 0.2% to $2.17. Crypto-related stocks outperformed, with Coinbase (COIN) rallying 6.95% and MicroStrategy (MSTR) surging 8.91% as institutional interest in digital assets remained strong. Investors remain cautious ahead of the US CPI report, which could impact risk appetite across traditional and digital markets.

Fixed Income

• US treasury yields rebounded, likely chiefly on an improvement of risk sentiment, with the 10-year treasury benchmark rising back above 4.25% and the 2-year yield lifting back above 3.92% after a drop to multi-month lows of 3.82% at one point yesterday.
• European yields rose yesterday, with the German 10-year Bund posting its highest daily close since October of 2023 at 2.90%, up 7 basis points. The intraday high in Bund yields stretching back to 2011 is 3.03%, but the highest daily close is a mere 5 basis points higher than yesterday’s at 2.97%. The German 2-year yield, on the other hand, fell two basis points to 2.2%, so the slope of the German yield curve spiked to its highest of the cycle at 70 basis points for the 2-10 slope, the highest since mid-2022.

Commodities

• Oil prices rose as the US halved its forecast for a global oversupply this year and next, siting reduced flows from Iran and Venezuela amid US steps to enforce sanctions. If enforced Iran’s production may tumble faster than planned production increases from OPEC+. The API reported a 4.5-million-barrel rise in US stocks with focus on Ukraine peace deal, light positioning supporting a technical rebound and monthly oil market report from OPEC.
• Copper prices increased due to a weaker dollar, and a potential 25% tariff that could raise US prices and in the short-term drive strong US imports, thereby reducing stockpiles elsewhere. The copper rally fed through to silver which jumped 2.6% on Tuesday before paring back overnight. The rally underpinned gold which continues to attract haven demand amid Trump's fluctuating tariff plans, recession worries and the recent dollar weakness.
• Corn fell during a choppy trading session, after the USDA in a monthly report left domestic corn inventories unchanged despite strong export sales and trade tensions with top buyer Mexico. Wheat futures ended lower after the report saw bigger-than-expected domestic and global wheat inventories.

Currencies

• EURUSD reached nearly 1.0950 yesterday before retreating to 1.0900 overnight on the continued focus on EU fiscal, but with the advance possibly trimmed by a rebound in US stocks and Trump attempting to manage sentiment on the economy and the administration’s policy intentions.
• The JPY dropped as most global yields rebounded yesterday , with the EURJPY posting a high since late January above 161.50, while USDJPY rebounded above 148.20 this morning after a low of 146.24 yesterday. Japan’s government pension fund GPIF said that it would not alter its allocation of foreign stocks yesterday, which brought a brief flurry of JPY selling that was not sustained. Overnight, Bank of Japan governor Ueda failed to express any concern about Japan’s bond yields as noted above.
• CAD rebounded from local lows versus the US dollar as the latest heated escalation between Trump and Canada was defused when the province of Ontario cancelled a 25% export duty on electricity to the USA, which saw Trump walk back a threat to double the US tariffs on aluminium and steel that are set to go into effect today. After trading above 1.4500 briefly yesterday, the USDCAD pair retreated below 1.4400, but then bounced back to 1.4440 late yesterday. The Bank of Canada meets today and is expected to cut its policy rate another 25 basis points to 2.75%.