Market Quick Take - 24 March 2025

Market Quick Take - 24 March 2025

Market drivers and catalysts

• Equities: Tariff flexibility boosts US stocks; earnings outlook remains weak; Europe lower on growth worries; mixed Asian markets
• Volatility: VIX below 20; cautious sentiment around economic data releases; lower immediate tariff risks
• Digital Assets: Bitcoin and altcoins rise; crypto equities mixed; cautious optimism prevails
• Currencies: USD trades higher, supported by short covering ahead of 2 April tariffs
• Fixed Income: Treasury yields firming up
• Commodities: Another shallow gold correction. Crude trades steady
• Macro events: Eurozone, UK & US Mar Services and Manufacturing PMI,

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

Macro data and headlines

• France wants the EU to use its anti-coercion instrument against the US if Trump uses tariffs to unfairly pressure the bloc. This instrument allows retaliatory measures like trade restrictions and control over investments. The European Commission is not currently considering it, and discussions await the US tariffs announcement on April 2.
• President Trump is set to announce "reciprocal tariffs" on April 2., targeting countries with tariffs on US goods, excluding some. They will take effect immediately, potentially straining ties with allies, but no sector-specific tariffs are planned. The scope is narrower than initially planned, with some countries exempt and existing metal tariffs possibly not cumulative.
• Chinese Premier Li Qiang says China is ready for "unexpected shocks" as Trump plans more tariffs. Li urges market openness and resource-sharing amid rising instability. He pledged interest rate cuts and support to ensure economic stability.
• Canadian PM Mark Carney set an election for April 28, with a close race between Liberals and Conservatives. The campaign focuses on Trump's tariffs and annexation threats, uniting Canadians. Carney and Conservative leader Pierre Poilievre both promise tax cuts but differ on economic and US relations.

Macro calendar highlights (times in GMT)

0815 – France Mar. Preliminary Services and Manufacturing PMI
0830 – Germany Mar. Preliminary Services and Manufacturing PMI
0900 – Eurozone Mar. Preliminary Services and Manufacturing PMI
0930 – UK Mar. Preliminary Services and Manufacturing PMI
1230 – US Feb. Chicago Fed. National Activity Index
1345 – US mar. Preliminary Services and Manufacturing PMI
1800 – UK Bank of England Governor Bailey to speak

Earnings events

• Tuesday: McCormick & Co
• Wednesday: Paychex, Cintas, Exor, Dollar Tree
• Thursday: Lululemon, Hennes & Mauritz

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

Equities

• US: US equities ended positively Friday amid volatile "quadruple witching" trading, with sentiment boosted by President Trump's hint at tariff flexibility. The S&P 500 rose 0.08%, Nasdaq gained 0.5%, and the Dow advanced 31 points (+0.08%). Despite gains, earnings concerns persisted, notably with FedEx dropping 6.45% and Nike declining 5.46% on weak forecasts. Boeing surged 3.06% after securing a significant US Air Force contract, negatively impacting Lockheed Martin (-5.79%). Futures opened higher Monday as markets anticipate further tariff updates and await key economic data, including flash PMI figures.
• Europe: European stocks closed lower Friday, marking a second consecutive day of declines as growth risks weighed heavily. The STOXX 50 fell 0.4%, STOXX 600 lost 0.6%, and Germany’s DAX edged down 0.08%, continuing its downward trend on concerns over growth and trade escalation. Siemens dropped nearly 2%, and travel stocks retreated after a temporary Heathrow closure due to a fire. France’s CAC 40 slipped 0.55%, pressured by Teleperformance (-2.84%) and STMicroelectronics (-2.73%), while the FTSE 100 declined 0.63%, impacted by weak consumer confidence and borrowing surges.
• Asia: Asian markets saw mixed performances Monday. Hong Kong’s HSI stabilized (-0.36%) after consecutive declines, as traders cautiously approached the April 2 tariff deadline. Tech provided mild support despite falls in property and financial sectors. China stocks reversed early losses, driven by optimism over locally developed AI chips, boosting Alibaba. South Korea’s KOSPI slightly recovered (+0.2%) amid political turmoil, aided by strength in auto and defense stocks. Japan’s markets were subdued following weak PMI data signaling contraction in manufacturing and services, highlighting ongoing economic pressures.

Volatility

Market volatility eased on Friday with the VIX retreating below 20, closing at 19.28 (-2.63%). VIX futures further declined Monday, aligning with rising US stock futures and signaling a potentially positive market open. Investors focus on upcoming economic data releases, notably Core PCE and unemployment figures, with implied volatility elevated around these events, indicating caution in options markets despite easing immediate tariff concerns.

Digital Assets

Cryptocurrencies advanced Monday as Trump's potentially narrower tariff approach improved risk sentiment. Bitcoin climbed 1.02% to $86,944, Ethereum rose 2.96% to $2,065, and Solana surged 3.91%. XRP also edged up 0.76%. Crypto-related equities had a mixed session: Coinbase (-0.27%) slightly declined, while Marathon Digital and Cipher Mining dropped 0.96% and 2.67%, respectively. Markets remain optimistic about potential trade clarity, maintaining a cautiously bullish outlook amid mixed signals.

Fixed Income

• US Treasury yields trade firmer in early Monday trading with 2s and 10s both trading 3 and 4 bps richer at 3.98% and 4.285% respectively, with safe haven demand weakening following reports that the 2 April plan will be more targeted.

Commodities

• Gold trades steady after a 50-dollar correction on Friday ran out of steam before gaining some momentum with support emerging around USD 3000. Yet the short-term outlook points to consolidation with news on 2 April tariffs and the wider market reaction to these being a major focus. Also watch silver which helped drive the latest set back, falling 4.5% after failing to find support above USD 34.
• New York HG Copper futures trade near last year's record as traders of physical copper continue to hover the global market for available stocks that can be shipped to the US and sold at a massive premium in New York. This tariff-related flow may leave the Chinese and other markets with insufficient stocks, further underpinning prices.
• Crude remains rangebound as traders consider new US tariffs, the risk of an economic slowdown, as well as increased OPEC+ supply from next month and the prospect of stepped-up US sanctions lowering supply from Iran.

Currencies

• Dollar Index (DXY) rallied for three days, closing above 104, possibly due to unwinding short positions ahead of April 2nd tariffs. Fed members, including Waller, discussed reserve levels and policy uncertainty. The biggest jump in the EUR futures net long in five years last week has left the euro exposed to near-term long liquidation.
• G10 currencies generally weakened due to USD strength, although NOK and SEK gained. SEK, the best-performing G10 currency this year, is expected by Rabobank to recover further against USD, EUR, and NZD.
• GBP trades near 1.29, as pressure mounts on UK Chancellor Reeves ahead of the spring statement. February's PSNB Ex-Bank exceeded expectations. With no tax hikes expected, spending cuts are anticipated. The UK may reduce its digital services tax to avoid a trade war with the US.
• USDJPY trades steady with some resistance seen around 150, despite strong Japanese inflation data driving BoJ’s expected 33bps tightening by year-end.