Market Quick Take – 20 August 2025

Market drivers and catalysts

• Equities: Tech-led U.S. pullback ahead of Jackson Hole and retail earnings; Europe climbed on discretionary strength; Asia weak with Hong Kong softer and Japan lower
• Volatility: VIX 15.6 with mild contango to Sep future 18.0; options imply a 62.9-point SPX move, or 1.0%
• Fixed Income: US and European yields edge slightly lower, Japan’s yields steady
• Digital Assets: BTC $112,778 (−3.0%), ETH $4,074 (−5.6%) on the 00:00 UTC cut; U.S. spot BTC ETFs saw $121.7m net outflows led by IBIT (−$68.7m) and ARKB (−$65.7m).
• Currencies: USD and JPY the winners, CAD and NZD the losers in a day marred by weak risk sentiment in the US and Japan.
• Commodities: Metal fatigue seen as traders eye peace talks; coffee powers higher
• Macro events: US 20-year Treasury note auction, US FOMC Minutes

Macro headlines

• UK Jul. CPI out at +0.1% MoM and +3.8% YoY vs. 0.0%/3.7% expected, respectively, while the core CPI was out at 3.8% YoY vs. 3.7% expected and 3.7% in Jun. and the CPI Services figure was a hot 5.0% vs. 4.8% expected and 4.7% last year.
• New Zealand’s Reserve Bank cut its Official Cash Rate 25 basis points to 3.00% as widely expected. The forward guidance, however, was more dovish than the market expected and the vote of 4-2 to cut by 25 rather than 50 basis points was the most divided vote in the central bank’s history.
• U.S. housing starts rose in July to an annualized rate of 1.428 million from a revised 1.358M in June, beating expectations of a drop to 1.29M. This marks the strongest pace in five months. Growth was led by multi-unit housing (up 11.6% to 470K), outpacing single-unit starts (up 2.8% to 939K).
• US building permits fell in July to an annualized rate of 1.354M vs 1.385M expected and 1.393M in Jun.
• Canada’s annual CPI eased to 1.7% in July, below forecasts and the BoC’s 2% target for the fourth straight month. Falling gasoline prices, down 16.1%, were the main drag, while food and shelter costs rose to 3.3% and 3%, respectively. The “trimmed mean” core measure of inflation was out at 3.0% vs. 3.1% expected and 3.0% in Jun.
• Japan’s trade deficit narrowed to JPY 117.6 billion in July, down from JPY 628.3 billion a year earlier but missing forecasts for a surplus. Exports fell 2.6%—the steepest drop since Feb 2021—due to U.S. tariffs, while imports declined 7.5%, less than expected..

Macro calendar highlights (times in GMT)

• 0900 – Eurozone Final July CPI
• 1430 – US Weekly DoE crude oil and product inventories
• 1500 – US Fed’s Waller to Speak
• 1700 – US Treasury to auction 20-year notes
• 1800 – US FOMC Minutes
• 2010 – New Zealand RBNZ Governor before parliament committee

Earnings events

Note: earnings announcement dates can change with little notice. Consult other sources to confirm earnings releases as they approach.

• Today: TJX Companies, Lowe’s, Analog Devices, Estee Lauder, Target
• Thu: Walmart, Intuit, Ross Stores, Workday

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

Equities

USA
US stocks declined Tuesday as weakness in tech weighed on markets. The S&P 500 fell 0.6%, while the Nasdaq 100 lost 1.4%, its lowest level in more than two weeks, dragged down by chipmakers, with Nvidia −3.5%, AMD −5.4%, and Palantir −9.3% after valuation and AI enthusiasm cooled. The Dow finished unchanged after touching a record high earlier in the session. Home Depot gained 3.2% despite the earnings miss, helped by solid housing demand. Intel surged 7% as SoftBank’s $2 billion investment lifted confidence in its turnaround. Attention now shifts to Fed Chair Powell’s speech at Jackson Hole on Friday for signals on September policy and possible rate cuts.

Europe
The STOXX 50 rose 0.9% and the STOXX 600 gained 0.7% to a five-month high, lifted by optimism over potential security guarantees for Ukraine after meetings in Washington between European leaders and Presidents Trump and Zelensky. Consumer discretionary led: LVMH and Kering rose 3%, Stellantis 3.2%, and Mercedes-Benz 2.7%. Mediobanca advanced after approval to acquire Banca Generali, creating Italy’s third-largest lender. Defence stocks fell as risk eased, with Rheinmetall down 4.9% and Thales also off more than 4%, while Leonardo was the weakest performer, sliding more than 10%.

Asia
Regional tone mixed into policy events. Nikkei 225 −0.4% as chip weakness outweighed yen support, while Hang Seng −0.2% to 25,123 with tech and property soft ahead of the PBoC LPR and Jackson Hole.

UK
FTSE 100 +0.3% as healthcare and energy steadied the tape. AstraZeneca +0.4% and BP +0.25% edged higher, while BAE Systems −3.9% followed the broader Europe defence sell-off.

Digital Assets

Bitcoin closed at $112,778 (−3.0%) and Ethereum at $4,074 (−5.6%) on the official 00:00 UTC close. U.S. spot BTC ETFs recorded $121.7m net outflows, led by IBIT −$68.7m and ARKB −$65.7m, partly offset by modest BITB inflows.

Volatility

VIX finished 15.57 with VIX1D 9.5; the curve is in mild contango to the Sep VIX future at 18.01. At the SPX close of 6,411.37, the VIX-based daily move is 62.9 points, or 1.0%.

Fixed Income

• US Treasury yields dipped slightly on the risk-off tone across global markets, with the benchmark US 10-year treasury yield edging lower to 4.31%..
• Yields at the long end of the curve in Europe were slightly tamed by the risk off tone across global markets as the benchmark German 2-year Schatz edged slightly lowe to 1.96% and the benchmark German 10-year Bund likewise pushed lower to 2.75%
• Japan’s government bond yields were steady near the highs of the cycle despite the risk off tone across global markets, throwing into question their ability to serve as a safe haven.
• US high yield corporate credit spreads versus US treasuries widened, with the Bloomberg high yield spread we track rising three basis points yesterday to 285 basis points, the widest in over a week.

• Gold dropped to USD 3,311, extending a four-day decline as peace talks and anticipation of Powell’s Jackson Hole speech kept traders cautious. Markets are looking for guidance on how the Fed intends to balance sticky inflation with slowing growth. Notably, ETF inflows remain resilient despite the latest price softness.
• Silver eased on profit-taking after failing to retest the July high near USD 40, shifting focus back to key support around USD 36.
• Brent crude holds near USD 66 as traders watch diplomatic efforts on Ukraine, while WTI trades at a USD 4 discount to Brent—near the widest since April—despite API data showing a stock draw and national inventories running below seasonal norms.
• Arabica coffee extended a two-week rally, up 12% in the past week to a two-month high. Brazilian producers are holding back beans, while cold-weather risks linger. US tariffs of 50% on Brazilian imports have further tightened domestic supply, boosting the futures contract traded in New York.

Currencies

• The New Zealand Dollar was pummeled overnight on the split dovish vote from the RBNZ and dovish guidance as the bank sees clear need to support the economy despite the risks of inflation rising in the near term. AUDNZD rose above 1.1000 for the first time since early April as the New Zealand yield curve steepened sharply on anticipation of more RBNZ easing than was previously priced in. 2-year NZD swaps fell 17 basis points to a more than three-year low.
• The US dollar and Japanese yen were the two winners in a day marked by risk aversion yesterday, as the smaller G10 currencies were the weakest – including the Canadian dollar, which was weighed down by a soft CPI report yesterday. USDCAD spiked higher and challenged above 1.3879 briefly overnight, the highest level since May, while AUDUSD dipped below 0.6550, nearing its lowest level since May, the early August level of 0.6419.
• EURUSD dipped below 1.1650 again to post its lowest level in over a week overnight at 1.1622, while GBPUSD dipped as low as 1.3462 overnight and AUDUSD below

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