Market Quick Take - 10 March 2025

Market Quick Take - 10 March 2025

Market drivers and catalysts

• Equities: US stocks rebounded but had worst week since Sep; DAX fell 1.8%, HSI -1.82% on deflation fears
• Volatility: VIX -6.03% to 23.37, but short-term vol remains high; zero-day options 56% of SPX volume
• Digital Assets: BTC $82.4K after $600M in liquidations; Trump’s crypto reserve order failed to boost sentiment
• Currencies: Euro shifts to so-far shallow consolidation after historic week.
• Fixed Income: Japanese yields post new highs, Historic week saw German yields close over 40 basis points higher last week.
• Commodities: Weak China data compounding a weak outlook for crude and metals
• Macro events: Eurozone Investor Confidence, EU Finance Ministers Meet in Brussels

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

Macro data and headlines

• The US economy added 151K jobs in February 2025, up from 125K in January but below the 160K forecast. Growth occurred in health care (52K), financial activities (21K), transportation and warehousing (18K), and social assistance (11K). Federal employment fell by 10K due to DOGE layoffs, with more impact expected from spending cuts and tariffs. Fed Chair Powell said that the central bank is in no rush to cut interest rates, but the overall economic outlook remains clouded by trade tensions and policy uncertainty.
• China's producer prices fell by 2.2% year-on-year in February 2025, slightly exceeding the forecasted 2.1% decline. This marked the slowest drop since August 2024, amid ongoing deflation for the 29th month, influenced by commodity price fluctuations and the Lunar break in January. Consumer prices fell 0.7% year-on-year in February, the first decline in 13 months versus an expected decline of 0.5%.
• Japan's nominal wages (labour cash earnings) rose 2.8% year-on-year in January 2025, below the 3% forecast and the lowest in three months. Real wages fell 1.8% as inflation outpaced wage growth. Unions demand a 6.09% pay hike, the largest in over 30 years. The Bank of Japan is expected to keep interest rates steady in March, seeking evidence of sustainable wage growth.
• Mark Carney has won the race to become Canada's next prime minister, taking over from Justin Trudeau, amidst economic uncertainty due to US President Donald Trump's trade policies. A former central banker, Carney has pledged to protect Canada's economy and sovereignty, promising to keep retaliatory tariffs on US goods until the US shows respect and makes credible commitments to free and fair trade

Macro calendar highlights (times in GMT)

0700 – Germany Jan Industrial Production and Trade Balance
0700 – Norway Feb CPI
0930 – Eurozone March Investor Confidence

EU Finance Ministers Meet in Brussels
US and Ukraine Officials Meet in Saudi Arabia

Earnings events

• Today: Oracle
• Tuesday: Volkswagen, Viking Holdings
• Wednesday: 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 rebounded Friday, but futures pointed lower as traders awaited key economic data. The S&P 500 rose 0.55%, Nasdaq 100 gained 0.74%, and the Dow Jones added 222 points. The rally followed Fed Chair Powell's cautious stance on rate cuts and mixed jobs data (151K jobs added, unemployment up to 4.1%). Broadcom (+8.4%) surged on strong earnings, while Costco (-7%) tumbled on weak results. However, markets suffered their worst week since September, with the S&P 500 down 3.1% and Nasdaq losing 3.45%, largely due to Trump’s evolving trade policies.
• Europe: European stocks slid on Friday as investors weighed Trump's tariffs and weak US labor data. The DAX dropped 1.8%, with Bayer (-6.5%) falling on capital raise concerns. Rheinmetall (-7%) and MTU Aero Engines (-5.7%) led declines, while Siemens Energy lost 4.8%. The CAC 40 fell 0.9%, dragged by luxury stocks (Kering -3.9%, LVMH -2.8%). The FTSE 100 held steady, but UK home prices showed a surprise decline. Despite Friday’s sell-off, the DAX gained 2% for the week, supported by renewed risk appetite earlier.
• Asia: Asian markets traded mixed. Hong Kong’s HSI fell 1.82% after China’s weak import/export data raised trade concerns. Deflation fears resurfaced as China's CPI fell 0.7% YoY, marking the steepest drop in 13 months, while PPI fell 2.2%. Mainland markets also declined, with the CSI 300 losing 0.8%. AI stocks struggled, leading to a 3% drop in Hong Kong's tech index. On the flip side, Japan’s Nikkei 225 rose 0.7%, and South Korea’s KOSPI gained 2.2%, benefiting from dip-buying in tech and EV sectors.

Volatility

The VIX dropped 6.03% to 23.37, signaling easing investor anxiety. However, short-term volatility indicators remain elevated, with VIX1D at 24.66 (-20.78%). Market uncertainty persists, driven by Trump's tariffs, Powell's rate stance, and upcoming inflation data. Traders continue to hedge aggressively, with zero-day options making up 56% of SPX trading. Despite the decline, implied volatility suggests further swings ahead as traders await CPI data on Wednesday.

Digital Assets

Bitcoin plunged 4.2% to $82,417, extending last week’s losses. Trump’s crypto reserve order, which consolidates seized assets but avoids direct purchases, failed to excite markets. Ethereum fell 5.4%, Solana slumped 7.9%, and XRP dropped 5.9%. Meme tokens also tumbled, with Dogecoin down 8.8% and $TRUMP losing 8.2%. Over $600M in liquidations hit the market, with a single $32M BTC/USDT order liquidated on Binance. Meanwhile, BBVA gained approval to offer Bitcoin and Ether trading in Spain, a rare bright spot for crypto adoption.

Fixed Income

• US treasury yields ended Friday slightly higher after mixed reaction to the US February jobs report, with the 10-year treasury benchmark rising more than 10 basis points off the lows of the session of 4.21% to close near 4.30%, with similar action at the front end of the yield curve ahead of this week’s data highlight – the February US CPI report up on Wednesday.
• Japanese government bond yields rose to new cycle highs despite softer than expected wage data out overnight, with the 2-year JGB trading 0.875% in late Asia trading, while the 10-year JGB yield rose to a new cycle high above 1.57%
• European yields ended a historic week with a step-wise rise in yields on anticipation of coming fiscal expansion, particularly from Germany, with the 10-year Bund rising more than 40 basis points to close the week at 2.84%, just a few basis points shy of the highest weekly close since 2011, the 2.88% posted in 2023. Coming chancellor Friedrich Merz of Germany said at the weekend is open to making concessions to the Green party to get his massive fiscal plan approved that would alter Germany’s “debt brake” rules.

Commodities

• Crude and industrial metals, two sectors depending on growth and demand, trade softer after weak economic data in China compounded an already troubled outlook for demand amid continued tariff chaos. Brent trades near USD 70 after touching a near four-year low last week. Oil traders will focus on the CERAWeek Energy Conference that starts in Houston today, as well as monthly oil market reports from the EIA on Tuesday, followed by OPEC and the IEA later in the week.
• Gold holds firm above USD 2,900 supported by concerns about the global economic outlook and haven demand amid tariffs and geopolitical tensions. While hedge funds turned small net sellers in the week to 5 March, bullion-backed holdings in ETFs rose for a sixth week, lifting the YTD total above 100 tons.

Currencies

• The Euro’s rise peaked Friday and retreated slightly after a blistering run higher on the coming German- and EU fiscal expansion. A cycle high in EURUSD was posted at 1.0889 while EURGBP peaked well above 0.8400.
• The US dollar was weak last week, suffering the most versus a strong euro, while the decline in USDJPY was slowed by the focus on soaring European yields las week. Key resistance in USDJPY near 148.65, a key level broken on the latest sell-off.
• USDCAD trades mid-range just above 1.4350 amidst the on-and-off Trump tariff threats and after the Canadian liberal party elected new leader Mark Carney at the weekend. He will soon become acting Prime Minister ahead of the next election, which has not yet been called (must take place by October 20 of this year, but snap elections are possible)