Market Quick Take - 28 February 2025

Market Quick Take – 28 February 2025

Market Drivers & Catalysts

• Equities: Tech selloff deepens; Nvidia -8.5%; Trump confirms 25% EU tariffs, new Mexico/Canada levies
• Volatility: VIX jumps 10.6%; Nasdaq 100 VIX spikes; PCE inflation in focus
• Digital Assets: Bitcoin -5.9% to $79.5K; Crypto stocks fall; Trump’s trade war fuels risk-off flows
• Currencies: US firms across the board on Trump tariffs, weak risk sentiment
• Fixed Income: US yield sink further all along the curve on weak risk sentiment, soft US data
• Commodities: Broad weakness as gold and silver correction deepens
• Macro events: Germany flash Feb. CPI, Canada GDP growth rate, US core PCE price index

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

Macro data and headlines

• President Trump reaffirmed that 25% tariffs on Canada and Mexico will take effect next week on March 4 and announced additional 10% tariffs on Chinese imports on the same date, the day an important meeting of the Chinese political leadership is set to begin.
• UK looks set to win a carve-out from US President Trump’s tariff threats as the latter said he would look to secure a trade deal with the UK that would see it avoiding tariffs. Trump refused to provide security guarantees for Ukraine in the form of a peacekeeping force.
• US initial jobless claims rose by 22,000 to 242,000 in the third week of February, above expectations of 221,000. This was the highest initial weekly claims number since a spike in early December, as the four week average of claims before yesterday’s number was 216k. Meanwhile, continuing claims fell by 5k to 1,862k, below the expected 1,870k.
• US pending home sales fell 4.6% in January 2025, following a revised 4.1% decline in December 2024, pushing the index to a record low of 70.6, below the expected 1.3% drop.
• US durable goods orders rose 3.1% to $282.3 billion in January 2025, exceeding expectations of a 2% increase, following a revised 1.8% drop in December. The rebound was driven by a 9.8% surge in transportation equipment, especially nondefense aircraft and parts (93.9%).
• Tokyo's core CPI rose 2.2% year-on-year in February 2025, down from 2.5% in January and below the 2.3% forecast. Despite this slowdown, inflation remains above the Bank of Japan's 2% target for the fourth month, supporting a hawkish monetary policy outlook.US Weekly

Macro calendar highlights (times in GMT)

0745 – France Flash Feb. CPI
0855 – Germany Feb. Unemployment Change/Rate
0900 – ECB Jan. CPI expectations
1300 – Germany Flash Feb. CPI
1330 – Canada Dec GDP, Q4 GDP
1330 – US Jan. PCE Inflation
1330 – US Jan. Personal Income and Spending
1445 – US Feb. Chicago PMI

Earnings events

• Today: BASF, Holcim

Next week

• Tuesday: Crowdstrike, Autozone
• Wednesday: Marvell Technologies, Adidas, Veeva Systems, Zscaler
• Thursday: Broadcom, Costco, Merck, Canadian Natural Resources, Deutsche Post,
• Friday: Constellation Software

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

Equities

• US: Tech-driven selloff deepens amid trade war fears. The S&P 500 fell 1.6% to 5,861, while the Nasdaq 100 plunged 2.7%, marking its worst session in nearly four months. Nvidia (-8.5%) led declines after an underwhelming earnings report, dragging down chipmakers and AI-related stocks. Sentiment worsened after Trump confirmed 25% tariffs on European autos and new levies on Mexico and Canada from March 4. Uber (-2.3%) dropped as Tesla seeks approval for a California ride-hailing service. Investors brace for today’s PCE inflation data, a key Fed metric. Futures are stabilizing after Thursday’s plunge.
• Europe: Markets slump as tariff risks weigh on sentiment. The Euro Stoxx 50 fell 1%, with autos and tech leading declines. Stellantis (-5.2%), Mercedes (-3%), BMW (-4%), and ASML (-2%) were hit hardest. The CAC 40 (-0.66%) and DAX (-1.19%) also slid, with Zalando (-4.2%) and Porsche (-3.9%) under pressure. ECB minutes suggest rate cuts are on the table. UK’s FTSE 100 bucked the trend, rising on Rolls-Royce (+15%), after strong guidance and a £1B buyback. Investors now focus on inflation prints from Germany, France, and Italy.
• Asia: Hong Kong and China equities tumble on fresh US tariffs. The Hang Seng Index fell 3.5%, with tech leading losses as Xiaomi (-6.1%), China Unicom (-5.5%), and Trip.com (-5%) sank. Trump’s new 10% tariffs on China added pressure, compounding profit-taking after a six-week rally. South Korea’s KOSPI lost 2.39%, with chipmakers Samsung (-1.95%) and SK Hynix (-4.57%) dragging the index lower. Japan’s Nikkei remained volatile, while investors await China’s Two Sessions next week, where key policy priorities will be outlined.

Volatility

VIX spikes amid equity turmoil. The VIX rose 10.6% to 21.13, tracking steep losses in US equities, while VVIX surged 8.2%. Nasdaq 100 volatility spiked 10%, reflecting the AI and chip selloff. Futures indicate some stabilization ahead of today’s Core PCE data, but trade war fears remain a key overhang.

Digital Assets

Crypto markets crushed as liquidity dries up. Bitcoin fell 5.9% to $79,583, breaking below $80K for the first time in weeks, while Ethereum (-8.1%) and Solana (-6.4%) also tumbled. $600B in market cap has been wiped as Trump’s tariffs trigger risk-off flows into USD. Meme tokens linked to Trump collapsed 80%, while Coinbase (-2.1%) and MicroStrategy (-8.8%) struggled alongside crypto stocks. Market sentiment remains weak, with liquidations exceeding $800M in 24 hours.

Fixed Income

US treasury yields continued pushing lower all along the curve yesterday on the combination of weak risk sentiment on Trump tariffs and the weak US economic data. The US 10-year benchmark yield dipped to 4.22% overnight and at the front end of the yield curve, the market is beginning to price in more easing from the Fed, with two further 25 basis point rate cuts now almost fully priced by the September FOMC meeting.

Commodities

• Commodities are heading for their first weekly loss in five amid broad risk aversion after the S&P 500 wiped out all gains for the year amid growth and trade war worries. The Bloomberg Commodity Index drops 2.7% with all sectors recording losses, led by softs and grains.
• Gold’s correction extended to USD 2,856 overnight in response to a stronger US dollar, and traders scaling back positions with rising volatility driving weak risk sentiment. The next critical level of note is just below USD 2,800, near the major top from October. Silver traded weakly as well, poking as low as 31.15 overnight.

Currencies

• The US dollar rose across the board on a fresh round of tariff threats from US President Trump, which also hit risk sentiment more broadly.
• AUD and NZD were the weakest among G10 currencies yesterday on the fresh tariff threats to China, with AUDUSD trading as low as 0.6210 overnight after trading above 0.6350 two days ago, a huge reversal after the pair teased a break higher.
• CAD was also weak as President Trump insisted that tariffs will go ahead against Canada and Mexico on March 4 (next Tuesday).
• The JPY was firm, managing to keep up with the US dollar’s pronounced strength despite softer Tokyo CPI numbers than expected for February, while EURUSD fell below 1.0400 overnight for the first time in four weeks.