Market Quick Take – 21 May 2025

Market drivers and catalysts

• Equities: US rally ends; Europe at 2-month highs; China optimism; UK inflation surprises
• Volatility: VIX flat at 18; options expiry could lift vol; short-term divergence
• Digital assets: BTC nears record; ETH, XRP, SOL gain; stablecoin bill progresses; SEC delays
• Fixed Income: Long Japanese government bond yields continue to rip higher
• Currencies: USD sharply weaker overnight, but USDHKD hits top of band
• Commodities: Crude and gold jumps on weaker dollar and Middle East risks
• Macro events: UK April CPI, US 20-year Treasury Auction

Macro data and headlines

• Tesla CEO Elon Musk said he will spend a “lot less” on political campaigns in the future as said he had “done enough” in that area. At the same time, he vowed to remain as CEO at Tesla for the foreseeable future as the continues to pursue an approximately USD 100 billion pay deal from Tesla that a Delaware court rejected as recently as December of last year.
• Canada's inflation rate fell to 1.7% in April 2025 from 2.3% in March, exceeding expectations of 1.6%. This is the smallest increase in consumer prices in seven months, mainly due to a drop in energy prices following the removal of the consumer carbon tax and OPEC's oil output hikes.
• CNN reported that US intelligence sources suggest Israel is preparing to strike Iranian nuclear facilities.
• Japan may accept a US tariff reduction instead of an exemption, reports Kyodo. Economy Minister Akazawa, the chief tariff negotiator, will visit the US for the third time on Friday, with a possible fourth visit this month, per Nikkei.
• Japan's trade deficit dropped to JPY 115.85 billion in April 2025 from JPY 504.69 billion a year earlier, below the expected JPY 227.1 billion surplus. Exports grew 2% to JPY 9,157.16 billion, despite slowing due to U.S. tariffs. Imports decreased 2% to JPY 9,273.00 billion, reversing March's rise, with a smaller drop than anticipated..

Macro calendar highlights (times in GMT)

0700 – UK Apr. CPI
1430 – US Weekly DoE Crude Oil and Product Inventories
1700 – US Treasury to auction 20-year Treasuries

Earnings events

• Today: TJX Companies, Lowes, Medtronic, Snowflake, Target
• Thursday: Intuit, Analog Devices, Workday, Autodesk, Copart

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

Equities

• US: US stocks pulled back Tuesday, ending the S&P 500’s six-day winning streak. The S&P 500 fell 0.39%, Nasdaq 100 -0.37%, and Dow -0.27%, as tech stocks led declines. Alphabet slipped 1.5% post-Google I/O, while Apple, Nvidia, and Meta were all lower. Tesla gained 0.5% after Musk confirmed his five-year CEO commitment. Home Depot's mixed earnings and cautious Fed remarks added to the downbeat tone. On Wednesday morning, US futures remained weak (ES -0.5%, NQ -0.61%) amid budget bill concerns and renewed friction with China over chip-related export controls. Moderna rose on FDA vaccine news, while Airbnb dropped 3.3% after Spanish regulators forced the removal of tens of thousands of listings.
• Europe: European stocks surged Tuesday to two-month highs on optimism around fiscal expansion. The STOXX 600 gained 0.73%, while DAX rose 0.42%, and CAC 40 climbed 0.75%. Autos, banks, and luxury names led the rally: LVMH, BMW, Kering, BBVA, and UniCredit were notable winners. Novo Nordisk jumped 4% after its CEO announced plans to step down. Vodafone gained 5.7% on a €2 billion buyback, while DocMorris soared 13.7% on stake acquisition news. However, Swiss Life and VAT Group fell despite earnings updates. On Wednesday, futures pointed to a cautious open as geopolitical risks and US fiscal outlook weighed.
• UK: The FTSE 100 rose 0.94% on Tuesday, marking its fourth straight day of gains, lifted by earnings optimism. Vodafone rose 7.26% on its buyback plan, while Diploma plc jumped 15.1% on upbeat earnings and guidance. Smiths Group and Greggs also posted strong gains. Hopes for a Russia-Ukraine ceasefire emerged after a Trump-Putin call, helping boost risk appetite. Meanwhile, UK CPI data for April surprised to the upside at 3.5% YoY, suggesting inflation remains sticky and keeping the BoE on alert. The UK also suspended trade negotiations with Israel, citing human rights concerns.
• Asia: Asian markets extended gains Wednesday. Hang Seng rose 0.45%, led by tech and battery stocks like CATL and Xiaomi. The CSI 300 added 0.41%, supported by a PBoC rate cut and rising commodity names like Zijin Mining and CMOC. In South Korea, the KOSPI climbed 0.99%, with pharma stocks Samsung Biologics (+6.2%) and Celltrion in focus. Korean officials pledged sector support amid US tariffs. Despite positive macro tailwinds, Hong Kong’s jobless rate edged up to 3.4%, and the HKD remained weak. UBS lifted its China stock index targets, signaling renewed optimism.

Volatility

Volatility was steady Tuesday with the VIX closing at 18.09 (-0.28%) ahead of Wednesday’s May options expiration. Ultra-short-term metrics diverged: VIX1D rose to 13.74 (+2.08%), while VIX9D fell 1.43% to 16.57, reflecting conflicting hedging needs. SpotGamma noted heavy positioning around the 16–20 VIX range, creating a pinning effect. Volatility could rise post-expiry as traders unwind short-vol positions. VIX futures remained in shallow contango, with the front month at 19.60. While realized volatility has collapsed, analysts caution that macro risks remain underappreciated.

Digital Assets

Bitcoin edged closer to its January record, rising 0.91% to $107,844, buoyed by the Senate’s progress on the GENIUS Act, a major stablecoin regulation bill. Ethereum added 3.14% to $2,604, while XRP and Solana gained over 1%. $TRUMP surged 12%, riding meme momentum. The SEC delayed decisions on Ether and XRP ETFs, as expected, pending further review. Despite this, institutional optimism persisted following President Trump’s support for the Strategic Bitcoin Reserve. Crypto-linked equities showed mixed moves: IBIT +1.53%, Coinbase -0.99%, and Riot -0.45%. Markets remain cautious amid regulatory delays and ongoing US-China tech tensions.

Fixed Income

• US long treasury yields continue to chop around below pivotal levels, as the 10-year treasury benchmark remains near the 4.50% level and the 30-year benchmark trades at 4.99% this morning after having failed to close above the 5.00% level the prior two days. The 2-year yield is similarly stuck near the round 4.00% level. Note that the US Treasury will auction 20-year treasuries today as the yield for that benchmark trades just north of the psychological 5.0% level this morning.
• Japan’s government bond yields rose further at the long end of the curve. Although the 10-year yield remains within the range established this year (high of 1.6% in March versus a 3-basis point rise to 1.54% yesterday), the 20-year yields and beyond have risen further to multi-decade highs, with the 20-year up another 5 basis points to 2.59% and the 30-year up over 9 basis points to 3.2%, the highest every recorded since its introduction in the late 1990’s.
• High yield credit spreads in the US remain quiet, with the Bloomberg high yield credit spread to US treasuries we track up down a basis points yesterday to 311 basis points. This after the recent low on May 13 at 299 basis points.

Commodities

• Crude prices jumped USD 1 on reports that Israel is preparing to strike Iranian nuclear facilities, once again raising the risk of a disruption at a time when traders have been grappling with the prospect of an oversupplied market later this year. Meanwhile, Brent and WTI both remain stuck below key resistance around USD 69 and USD 65, respectively.
• Platinum broke out of its long-held trading range, surging 5.6% to a one-year high at USD 1,068 before encountering some profit-taking. Surging demand in China for coins, bars, and jewellery as customers seek an alternative to expensive gold is adding to a third annual supply deficit.
• Gold’s consolidation period shows signs of maturing after a break above technical resistance at USD 3,250 triggered an extension overnight to USD 3,314, supported by renewed US dollar weakness amid ongoing concerns about the fiscal health of the US economy, and the latest geopolitical news from the Middle East. Silver, meanwhile, followed suit, rallying towards the next level of resistance around USD 33.25, which is followed by a triple top at USD 33.68.
• Chicago wheat futures traded up around 5% this week, after recently hitting a five-year low, supported by demand from Algeria and Saudi Arabia, and worsening crop conditions as dry weather has started to stress American fields. Weather developments are also supporting corn at a time when speculators hold net short positions in both crop futures.

Currencies

• The US dollar fell sharply overnight, with EURUSD zipping back above 1.1300 for the first time in almost two weeks, trading 1.1330 in late Asian hours. The USDJPY move made progress lower as well, though the JPY is perhaps held back by concerns about instability in the JGB market as long yields there blow higher (see above in Fixed Income).
• Despite the USD weakness elsewhere, the Hong Kong dollar is weak as USDHKD has pushed to the top of the permitted band, a move that began two weeks ago from the very bottom of the range and one that has been aggravated this week by Moody’s downgrade of US treasury debt as many Hong Kong pension funds hold large amounts of US treasuries, but are only allowed to hold more than 10% of any instrument not rated AAA by at least one major ratings agency.

For a global look at markets – go to Inspiration.