Market Quick Take - 26 March 2025

Market Quick Take - 26 March 2025

Market drivers and catalysts

• Equities: US cautious gains, EU boosted by tariffs, Asia mixed recovery
• Volatility: VIX declining, futures muted, cautious sentiment
• Digital Assets: Bitcoin steady, GameStop BTC investment, altcoins selective
• Currencies: USDJPY moves linked to the yield differential
• Fixed Income: US Treasuries pair losses on soft economic data
• Commodities: HG copper hits fresh record as tariff decision looms
• Macro events: UK CPI and Chancellors Spring Statement

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

Macro data and headlines

• U.S. sales of new single-family homes rose 1.8% to an annual rate of 676,000 in February 2025, recovering from a 6.9% drop in January but slightly below the expected 680,000. Warmer weather and easing mortgage rates attracted some buyers, but sales may remain pressured by economic uncertainty.
• Consumer confidence fell for the fourth month in March, dropping to 92.9 vs 94 est, the lowest in 4 years. Expectations for future business conditions and employment prospects hit a 12-year low, and optimism about future income vanished. Inflation expectations rose from 5.8% in February to 6.2% in March, amid concerns about high staple prices and tariffs.
• UK retail sales gauge fell by 18 points to -41.0 in March 2025, the lowest since April 2024 and below the expected -28.0. This marks the sixth consecutive monthly decline, with global trade tensions and the Autumn Budget cited as factors reducing consumer and business confidence, leading to weaker demand.
• The US and Russia have agreed to ensure safe navigation and prevent military use of commercial vessels in the Black Sea, as per a White House statement. They will also develop measures to ban strikes on energy facilities in Russia and Ukraine. The US will support ongoing negotiations for a peaceful resolution.

Macro calendar highlights (times in GMT)

0700 – UK Feb CPI and RPI
1000 – UK Chancellor’s Spring Forecast Statement
1230 – US Feb Durable Goods Orders
1430 – EIA's Weekly Crude and Fuel Stocks Report

Earnings events

• Wednesday: Paychex, Cintas, Exor, Dollar Tree
• Thursday: Lululemon, Hennes & Mauritz, Walgreens Boots

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

Equities

• US: US equities closed higher Tuesday, with the S&P 500 (+0.16%) up for its third consecutive day, driven by cautious optimism on President Trump's tariff exemptions and potential new levies on autos and pharmaceuticals. Tesla surged 3.4%, continuing its recent rally, while Nvidia slipped 0.6%. Consumer confidence fell to a four-year low, reflecting significant economic concerns ahead. KB Home (-5.1%) cut its annual sales forecast, and UniFirst plunged 14.1% after acquisition talks collapsed. US futures are muted ahead of today's economic data and corporate earnings, with Dollar Tree among the major names reporting.
• Europe: European markets rose Tuesday on improved German business confidence and optimism regarding selective US tariffs. STOXX 50 (+0.7%) and STOXX 600 (+0.6%) climbed, and Frankfurt's DAX jumped 1.1%, breaking a losing streak, supported by infrastructure and defense spending plans. President Trump's tariff exemptions, alongside confirmed tariffs on autos and pharmaceuticals, influenced investor sentiment positively. Ukraine and Russia's Black Sea ceasefire further buoyed markets. Bayer (+5.1%) and Airbus (+2.7%) led gains in Frankfurt and Paris respectively, offsetting declines by Kuehne und Nagel (-4%) and Kingfisher (-14%).
• Asia: Asian stocks were mostly positive Wednesday, tracking US optimism on selective tariffs. Hong Kong's Hang Seng (+0.2%) rebounded slightly, while South Korea’s KOSPI (+1.1%) surged, led by chipmakers and autos after new US investment announcements. Australian shares climbed (+0.7%) on softer inflation data, fueling rate-cut expectations. China's markets were steady, though concerns persist over possible new US tariffs. Japan’s Nikkei rose moderately despite cautious remarks from the Bank of Japan on further rate hikes.

Volatility

Market volatility continued to ease Tuesday, with the VIX declining to 17.15 (-1.89%). VIX futures also edged slightly lower (-0.59%), reflecting subdued investor sentiment. With minimal impactful economic data scheduled for today, markets appear poised for a steady session amid ongoing uncertainty regarding tariff developments.

Digital Assets

Bitcoin held steady around $87,536, reflecting cautious optimism amid tariff uncertainties. Ethereum slightly declined to $2,059, while XRP gained modestly. GameStop shares surged over 8% post-market after announcing Bitcoin integration into its treasury reserves. Altcoins were generally muted, except for notable gains by Polygon (+7.8%) and Dogecoin (+3.5%). Analysts remain cautious, viewing recent price action as potentially misleading ahead of further clarity on Trump's tariff policies.

Fixed Income

• US Treasuries yields edged higher in Asia, almost reversing the drop that was triggered by weak consumer confidence data. Front-end yields fell, steepening the curve amid trade war concerns with strong demand for 2-year notes giving the short end a relative boost. The 10-year yield was around 4.34%, outperforming European bonds, as swaps anticipated more Fed easing.

Commodities

• HG copper futures surged to a fresh record high overnight at $5.374 on speculation Trump my implement import tariffs within weeks, much earlier than expected. With LME prices in London falling, this much sought after energy transition metal now trades at a 17% premium in NY, highlighting an increased binary risk depending on the eventual tariff level.
• Gold bounced from $3000 support on worries over the US economic outlook, while silver staged a strong rebound, supported by fresh selling of the XAUXAG ratio after it reached a well-established area of resistance around 92
• Chicago and Paris wheat futures saw further declines after US announced it had reached agreements with Russia and Ukraine to ensure safe navigation in the Black Sea. In addition to supply from the two countries, prices were already under pressure from improved weather forecasts in important growing regions
• Soybeans and corn are both pressured by expanding Argentina corn and Brazil soybean harvests, along with concerns over U.S. tariffs that could trigger retaliation from major buyers like Mexico and China

Currencies

• USD showed only slight weakness throughout the day, recovering from intraday lows with support emerging after a short dip below the 104.00 level, despite disappointing US Consumer Confidence data. Meanwhile, President Trump confirmed the April 2nd tariffs and repeated his criticism of the EU concerning trade.
• EUR fluctuating around the 1.08 level, ultimately losing an initial boost from the German Ifo data. The German Ifo data was stronger than the previous figures and generally exceeded expectations. A few ECB speakers made statements, but they offered little new information.
• GBP saw slight gains, holding above the 1.29 mark as market participants anticipated the latest UK inflation data as well as the Chancellors Spring forecast statement.
• JPY strengthened on Tuesday only to weaken again overnight as USDJPY continues to take its directional input from movements in yield differentials to US Treasuries.