Market Quick Take - 5 February 2025

Market Quick Take – 5 February 2025

Key points

• Equities: Google and AMD push US futures down in late trading, Europe gains, DAX rebounds
• Volatility: VIX down 8% yesterday; VIX futures up 2.6% this morning
• Digital Assets: BTC < $100K, crypto stocks mixed, US sovereign wealth fund crypto speculation
• Currencies: US dollar weakens on sense Trump tariffs are negotiating tactic more than trade war threat. JPY sharply higher overnight non wage data.
• Commodities: Sector reaches a 24-month high as broad rally continues
• Fixed Income: US treasuries find buyers late yesterday with US 10-year eyeing key 4.50%
• Macro events: US Jan. ADP Employment Change, US Dec. Trade Balance, US Jan. ISM Services, US Fed’s Bowman to speak.

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

Macro data and headlines

• US President Trump declares “maximum pressure” policy against Iran, also says US should “take over” the Gaza strip, saying that Palestinians should leave it and be “resettled” permanently. “The US will take over the Gaza Strip, and we will do a job of it, too. We’ll own it and be responsible for dismantling all of the dangerous unexploded bombs and other weapons on the site.” He said in a press conference with Israel’s Benjamin Netanyahu.
• Japan’s wage data for December comes in far stronger than expected overnight, with the Y/Y Cash Earnings figure hitting +4.8% versus +3.7% and the November data revised up to 3.9% vs. 3.0% originally reported. The “Same Sample Base” data was up 5.2% versus 3.6% expected, while Real Cash Earnings rose +0.6% YoY vs. -0.1% expected.
• The US Postal Service will temporarily suspend inbound international packages from China and Hong Kong Posts, which will block shipments from Chinese retailers, including giants like Shein and PDD Holding’s Temu. The stop comes after Trump slapped 10% tariffs on all imports from China, and revoked the “de minimis” exception that formerly allowed packages with a value under USD 800 to be sent without tariffs. There were four million “de minimis” packages sent per day in 2024, according to a Morningstar analyst.

Macro events (times in GMT)

Eurozone Final Jan. Manufacturing and Services PMI (0900), Eurozone Dec. PPI (1000), US Jan. ADP Employment Change (1315), US Dec. Trade Balance (1330), Canada Dec. International Merchandise Trade (1330), ECB Chief Economist Lane to speak (1400),  US Jan. ISM Services (1500), US Weekly DoE Crude Oil and Product Inventories (1530), US Fed Voter Goolsbee to speak (1930), US Fed voter Bowman to speak (2000),

Earnings events

• Today: Novo Nordisk, Toyota, Disney, Qualcomm, Boston Scientific, Uber, TotalEnergies, Fiserv
• Thursday: Amazon.com, Eli Lilly, AstraZeneca, Linde, Philip Morris, L’Oreal, Honeywell, ConocoPhillips, Bristol-Myers Squibb

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

Equities

• US: US equities climbed Tuesday, with the S&P 500 +0.72%, Nasdaq +1.35%, and Dow +0.3%, driven by strength in energy and tech stocks. Palantir surged 24% after strong earnings and guidance, while Nvidia gained 1.3%. However, Alphabet tumbled 7% post-market after missing cloud revenue estimates and guiding for higher-than-expected capex at $75B. AMD also fell 8.7% after data center revenue disappointed. PepsiCo (-4.5%), Estee Lauder (-16.2%), and Merck (-8.8%) slid on weak forecasts. US futures edged lower overnight, with Nasdaq futures -0.6% as investors brace for key earnings today from Uber, Disney, Qualcomm, and Novo Nordisk.
• Europe: European stocks advanced Tuesday, with STOXX 50 +1% and STOXX 600 +0.3%, as optimism grew over North American trade developments and strong corporate earnings. The CAC 40 rose 0.66%, supported by Dassault Systemes (+8.4%), BNP Paribas (+3.8%), and STMicroelectronics (+2.6%). Germany’s DAX rebounded +0.4%, led by Infineon (+10%) after raising its full-year revenue guidance. Ferrari surged 8.3% after record results. However, UBS fell 7.1% on disappointing earnings. The Swiss Market Index lagged (-0.57%) as China’s retaliatory tariffs fueled uncertainty. Today, markets will focus on earnings from Novo Nordisk, Disney, and Qualcomm, alongside US economic data.
• Asia: Asian equities were mixed, with Hong Kong’s Hang Seng Index dropping 1.3% as investors weighed renewed US-China trade tensions. China's markets reopened from the Lunar New Year break, with the CSI 300 and Shanghai Composite slipping ~0.2%. Beijing imposed new tariffs on select US goods, adding pressure on trade-sensitive sectors. Japan’s Nikkei was flat, while Australia’s ASX 200 gained 0.6%. AI stocks saw mixed performance, with Hong Kong-listed DeepSeek rallying, lifting sentiment in China’s tech sector. Today, investors remain cautious as trade tensions evolve, while key earnings and economic data continue to shape market direction.

Volatility

The VIX fell 7.57% to 17.21, as broader markets rallied, though VIX futures rose 2.61% to 17.65, signaling uncertainty ahead of key earnings and economic reports. The drop in implied volatility reflects easing near-term fears, though short-term indicators suggest caution. Nasdaq futures fell 0.6% overnight following Alphabet’s disappointing results. Market focus today is on the ADP Nonfarm Employment report and ISM services data, which could impact sentiment. Options markets remained active, with Nvidia, Tesla, and Palantir leading in volume as traders positioned around earnings and macro risks.

Digital Assets

Bitcoin (+0.34%) hovered just below $100K, trading at $98,186, while Ethereum rose 1.49% to $2,774. XRP (+0.06%) and Solana (+0.52%) saw marginal gains. Crypto stocks showed mixed performance, with RIOT (+2.5%) and CLSK (+2.36%) rising, while COIN (-1.41%) and MARA (-1.67%) declined. Market sentiment was muted as President Trump’s administration discussed the potential inclusion of Bitcoin in a newly proposed US sovereign wealth fund, sparking speculation over institutional adoption. Meanwhile, China's new tariffs added uncertainty to risk assets, including digital currencies. Traders remain focused on regulatory developments and macroeconomic shifts.

Fixed Income

• US yields fell yesterday, if still trading within range, although the intraday fall in the US 10-year benchmark was notable as it came after a steep sell-off in treasuries intraday, with the yield nearly hitting 4.60% before falling back to 4.51%, just above the critical 4.50% level that was the high back in November.
• Japanese bond yields rose further overnight all along the yield curve despite the strength in US treasuries yesterday as traders focused on stronger than expected December wage data out of Japan overnight. The spring wage negotiations from now through March will prove critical for the inflation outlook in Japan.

Commodities

• The Bloomberg Commodity Total Return Index trades at a fresh 26-month high, up 5.5% YTD and 13% YOY, with all sectors yielding a positive return so far this year, led by precious metals and agriculture. On an individual total return basis, which includes the impact of rolling contracts, the top-performing commodities in the past year are Arabica coffee (121%), silver (44%), gold (39%), HG copper (16%), and WTI crude oil (15%).
• WTI crude oil futures bounced back to just under USD 73 per barrel on expectations of tighter US sanctions against Iran as President Trump aims to halt its oil exports. The bounce followed an earlier round of fund long liquidation that briefly saw prices tumble through support to USD 70.65.
• Precious metals’ ongoing rally has taken gold to a record USD 2,862 and silver to a three-month high at USD 32.35, amid worries that global tariffs will impede growth, raise debt levels, and increase inflation while boosting demand for safe-haven assets.
• Copper futures rose despite ongoing US-China trade tensions as Chinese markets reopened, supported by a softer dollar, growth in major manufacturing sectors, and the first US factory expansion in over two years, as reported by the ISM.

Currencies

• The US dollar weakened further yesterday after its spike open to start the week on the sense that Trump will use tariffs chiefly as a negotiating tactic to extract specific measures rather than to provoke trade wars. EURUSD closed the gap with Friday’s close of 1.0362 and traded above 1.0380 by late yesterday before finding resistance.
• CAD and MXN rebounded strongly as Canada and Mexico avoided Trump’s tariffs for now, with USDCAD even managing to plunge twoad the bottom of the range for the year near 1.4300 yesterday before bouncing.
• The JPY rose sharply overnight on softer US treasury yields and the latest batch of Japanese wage data, taking USDJPY to its lowest level for the year well south of 154.00, setting up a focus on the converging 100-day and 200-day moving averages near 152.75.