Market drivers and catalysts
Equities: Europe and Asia rebounded while Wall Street stalled, as lower oil eased panic but the Iran risk premium stayed alive.
Volatility: Iran conflict and oil risk still driving markets, CPI in focus
Digital Assets: Crypto steady below recent highs, institutional demand stronger for Bitcoin
Fixed Income: US Treasury yields rebound ahead of US Feb. CPI report.
Currencies: USD weakens slightly in Asia’s Wednesday session. AUD sets new cycle highs.
Commodities: Oil choppy on Hormuz Strait concerns and rumors and as IEA mulls strategic reserve release.
Macro events: US Feb. CPI, US Treasury to auction 10-year Notes
Macro headlines
Tensions between the US and Iran are escalating, with President Trump warning Iran about militarily responding to mines placed in the Strait of Hormuz. The US reportedly destroyed Iranian mine-laying vessels, and Trump indicated the conflict might end soon as the operation progresses ahead of schedule, calming oil price jitters. Market volatility was exacerbated by mixed messages from administration officials, including a retracted post by Energy Secretary Chris Wright.
The IEA is proposing the largest ever strategic oil reserve release to counter rising prices due to escalating Middle East tensions, surpassing the 182 million barrels released in two instances during Russia's invasion of Ukraine in 2022.
ECB President Christine Lagarde vowed to control inflation despite surging energy prices, expressing commitment to prevent past price spikes. In a Tuesday interview, she assured that Europe is better prepared to absorb current shocks due to stronger policies, though market uncertainty remains high.
The FT reports that JPMorgan is marking down the value of some of its private credit portfolios, the latest in a string of negative coverage on the value of private credit assets and in some cases limits on investor withdrawal of funds.
Macro calendar highlights (times in GMT)
1230 – US Feb. CPI
1230 – US Feb. Real Average Hourly Earnings
1700 – US Treasury to auction 10-year Notes
0000 – Australia Mar. Consumer Inflation Expectations
0001 – UK Feb. RICS House Price Balance
Earnings this week
Today: Inditex, Rheinmetall, Porsche, Henkel
Thursday: Adobe, Wheaton Precious Metals, Assicurazioni Generali, BMW, RWE, Hannover Re, Dollar General, Ulta Beauty, Lennar
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The S&P 500 fell 0.2%, the Dow slipped 0.1%, and the Nasdaq was flat as hopes of de-escalation fought with fresh confusion around safe passage through the Strait of Hormuz. Lower oil calmed nerves, but not enough to keep the market from wobbling into the close. Nvidia, Micron, and Intel outperformed after TSMC said January-February revenue rose 29.9% year on year, a useful reminder that artificial intelligence demand had not taken the week off. After the bell, Oracle jumped 11.8% after cloud infrastructure revenue surged 84%, while Amazon’s roughly $37 billion bond sale showed how capital-hungry the build-out remains. U.S. CPI is the next test.
Europe: The STOXX 600 rose 1.9%, the Euro STOXX 50 gained 2.7%, and the FTSE 100 added 1.6% as Brent’s retreat eased the region’s stagflation headache and pulled bond yields lower. Banks rebounded hard, industrials joined in, and the mood improved just enough for investors to remember that not every day needs to start with an oil chart. ASML rose 4.6%, Infineon gained 6.1%, and Prosus surged 9.6% after TSMC’s sales update supported artificial-intelligence-linked names, while Volkswagen added 2.6% after guiding to better margins and Persimmon climbed 4.5% on stronger housing guidance. Markets now watch whether calmer energy prices can keep the central-bank debate from getting loud again.
Asia: Asia staged the strongest rebound of the day, led by South Korea, where the KOSPI jumped 5.4%, while Japan’s Nikkei rose 2.9%, Hong Kong’s Hang Seng 2.2%, Australia’s ASX 200 1.1%, and Shanghai 0.7%. The driver was simple: oil cooled, risk appetite returned, and chip optimism got another lift from TSMC’s 29.9% rise in January-February revenue. Samsung Electronics and SK Hynix both climbed more than 8% as investors rushed back into memory and artificial intelligence hardware, while Nio’s U.S.-listed shares rose 15.4% after the company reported a surprise quarterly profit and better first-quarter guidance. The next question is whether this bounce grows legs once energy headlines return.
Volatility
Market volatility continues to be driven mainly by macro developments rather than company-specific news. The Israel-US conflict with Iran remains the dominant risk factor for global markets because of its potential impact on oil supply and inflation expectations. Oil prices surged earlier in the week on concerns about disruption to shipping through the Strait of Hormuz before stabilising somewhat as investors assessed the likelihood of escalation. For investors, the key point is that even if equities appear relatively stable day to day, markets remain sensitive to geopolitical headlines and energy prices, which could still influence inflation and central-bank policy expectations.
Another key focus today is the US consumer price index (CPI) release, which will help investors assess whether inflation pressures are easing or remaining persistent. CPI data often triggers sharp moves across equities, bonds and currencies because it directly affects expectations for the Federal Reserve’s interest-rate path.
Options pricing suggests markets are preparing for continued swings. Based on SPX options, the market currently implies an expected move of about ±120 points (±1.77%) into Friday’s 13 March expiry. For today’s expiry, the implied move is roughly ±75 points (±1.10%).
Looking at today’s options chain, near-the-money calls appear slightly richer than comparable puts, indicating a mild upside skew. This suggests that while investors remain cautious, some are still positioning for a rebound rather than only hedging downside risk.
Digital Assets
Digital assets remain relatively resilient despite the uncertain macro backdrop. Bitcoin is trading around $69,920, Ethereum near $2,024, Solana around $86, and XRP near $1.38. While prices have pulled back from recent highs, the overall tone remains constructive as investors weigh the same macro drivers affecting traditional markets, particularly geopolitical developments and US inflation data.
Institutional activity continues to be an important driver of sentiment. The iShares Bitcoin Trust (IBIT) trades around $39.71, while the iShares Ethereum Trust (ETHA) is near $15.40. Recent ETF flow data shows stronger demand for bitcoin exposure than for ether, with US spot bitcoin ETFs seeing notable inflows earlier this week while ether ETFs have been more mixed. This pattern suggests institutional investors currently prefer bitcoin as the primary crypto exposure during periods of macro uncertainty.
Fixed Income
US Treasury yields pulled back higher Tuesday ahead of Wednesday’s US Feb. CPI release, but remain rangebound. The benchmark 2-year treasury yield rose from a low below 3.53% to close at 3.59% Tuesday before retreating in Asian trading hours Wednesday, while the benchmark 10-year treasury yield rose from a low below 4.09% to close at nearly 4.16% Tuesday. A treasury auction of 3-year notes saw tepid demand.
US high yield corporate bonds rallied on firming risk sentiment Tuesday as the Bloomberg measure of the spread between high yield bond yields and US treasury yields we track tightened nine basis points to 292 basis points after the prior day’s multi-month high in the spread.
Japan’s government bond yields were steady at the front-end of the curve and fell slightly further out the curve on strong demand at an auction of 5-year JGB’s. The benchmark 10-year JGB yield fell about a basis point from Tuesday’s close to below 2.17%, but was down over three basis points from the intraday yield high.
Commodities
Oil prices have seen significant volatility persisting, with rumours of a Navy escort of a crude tanker through the Hormuz Strait at one point Tuesday cratering prices for May Brent to near 81 per barrel before those rumours were denied and prices rebounded above USD 91 per barrel late Tuesday before settling below 88 dollars by late in Asian trading hours Wednesday. The US Navy has said that it will not be escorting any oil tankers though the Hormuz Strait at this time. Some of the pressure on oil prices may stem from possible IEA plans for a coordinated strategic reserve release.
- Gold poked to new local highs Tuesday above 5,200, but dipped back into the range just below that level in Asia’s Wednesday session, while silver tried to hold on to its more ambitious rally Tuesday, where it tested the 90 level before retreating to 87.50.
Currencies
The US dollar chopped around on Tuesday but weakened slightly in Asia’s Wednesday session as EURUSD rose toward 1.1630 from a session low of 1.1603, with the one-week high at 1.1667 perhaps the upside focus. The Japanese yen was weakest late Tuesday and early on Wednesday in Asian, perhaps on rising global bond yields, but the yen came back stronger in later Asian trading hours, pushing USDJPY back just below 158.00 after a 158.39 high and EURJPY to 183.75 after a 184.08 high.
The Australian dollar jumped stronger nearly across the board as risk sentiment has recovered. AUDUSD rallied to a new cycle high above the recent cycle high of 0.7147, posting a 0.7186 high water mark so far in Asian trading hours Wednesday, the highest since June of 2022. AUDNZD posted strong new highs above 1.2050, the highest level since 2013.
