Key points
Equities: Powell holds rates steady; CPI in focus; DAX & STOXX hit records; HK tech rallies; Alibaba AI deal boosts sentiment
Volatility: VIX 16.02 (+1.33%); CPI to set market tone; short-term volatility jumps
Digital Assets: Bitcoin flat; XRP approaches breakout; Solana ETF filings fuel speculation; crypto stocks slump.
Currencies: JPY crosses extend vicious reversal overnight as JPY sells off ahead of US CPI today
Commodities: Gold reverses from strong new all-time highs yesterday
Fixed Income: US yield curve bear steepens taking US 10yr benchmark back above key 4.50%
Macro events: US January CPI, US Fed Chair Powell testimony before House Panel, US 10-year Treasury Note Auction
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
Macro data and headlines
Fed Chair Powell made it clear in testimony before a Senate Panel yesterday that the Fed is in no hurry to cut rates further. There was little reaction to the news as the market continues to assess that the Fed will cut the Fed Funds rate only once more by the September FOMC this year.
Tesla dropped more than 6%, seemingly on the drumbeat of recent news of poor sales of its cars, especially in Europe after last week it was reported that sales in Germany had fallen 59.5% in January. The stock is down over 12% this week and 30% from its December high.
Intel shares rose sharply yesterday, rising more than 6% after US Vice President JD Vance made strong comments in support of US semiconductor design and manufacturing.
Macro calendar highlights (times in GMT)
0900 – Italy Dec. Industrial Production
1330 – US Jan. CPI (expected +0.3% MoM and 2.9% YoY, and ex Food and Energy at +0.2% MoM/3.1% YoY)
1500 – US Fed Chair Powell to testify before House panel
1530 – US DoE Weekly Crude Oil and Product Inventories
1800 – US Treasury to auction 10-year Notes
1830 – Bank of Canada to release summary of deliberations
2205 – US Fed Governor Waller to speak on stablecoins
Earnings events
Today: Softbank, CME Group, Williams Companies, CVS Health, Robinhood, Siemens Energy, Heineken
Thursday: Siemens, Applied Materials, Unilever, Sony Group, Palo Alto Networks, Deere & Company, Moody’s, AirBnB, Coinbase, Adyen, Datadog
Friday: Hermes, Safran, Enbridge
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
US: Fed, tariffs, and earnings shape mixed markets
US equities ended mixed on Tuesday as Fed Chair Powell reiterated no urgency to cut rates, while Trump’s 25% steel and aluminum tariffs rattled trade-sensitive sectors. The S&P 500 held steady (+0.03%), the Dow gained 0.3%, and the Nasdaq 100 fell 0.29% as tech stocks weakened. Tesla (-6.3%) led losses, while Apple (+2.2%) surged on AI news with Alibaba. Coca-Cola (+4.7%) jumped on strong earnings. Markets await Wednesday’s CPI report, expected at 2.9% YoY, for further Fed policy clarity. Treasury yields ticked higher, with the 10-year at 4.54%.
Europe: DAX and STOXX hit records amid strong earnings and AI rally
European stocks extended gains on Tuesday, with the STOXX 50 climbing 0.6% to a record 5,392, and the STOXX 600 up 0.3%. The DAX reached a fresh peak at 22,034 (+0.6%), boosted by SAP (+2.3%) and ASML (+0.8%). Luxury and financials also advanced, with Ferrari (+2.8%) and Kering (+1.3%) gaining. In the UK, the FTSE 100 hit a record despite BP (-0.4%) and Entain (-10%) falling on profit concerns. Metal stocks declined as Trump’s tariffs hit European exporters. Swiss markets followed suit, with SGS (+6.7%) rallying on earnings, while Novartis announced a $925M biotech acquisition.
Asia: Hong Kong rebounds as Alibaba surges on AI deal
Hong Kong’s Hang Seng Index soared 2.38% to 21,772, hitting a 4-month high as Alibaba (+6.7%) rallied on reports of an AI partnership with Apple. Lenovo (+4.6%) and BYD Electronic (+6.2%) also gained amid renewed optimism for China’s tech sector. Meanwhile, Shanghai stocks remained flat as investors awaited stimulus clarity. The HS Tech Index added 1.2%, led by Q Technology (+4.3%), which hit a 3-year high on strong camera module shipments. Investors focus on China’s upcoming legislative meeting, with further AI and manufacturing incentives expected.
Volatility: VIX edges up ahead of CPI, market direction unclear
The VIX rose 1.33% to 16.02, signaling mild unease ahead of the US CPI release. The VIX1D (+24.62%) spiked sharply but remains below critical stress levels. Futures are slightly lower this morning, indicating a cautious market stance. All eyes are on the CPI print at 14:30 GMT, which will likely dictate today’s equity and rate moves.
Digital Assets: Bitcoin holds steady, Solana ETFs gain traction
Bitcoin (BTC +0.09%) traded near $95,880, consolidating within a narrow range ahead of macro events. XRP (-0.56%) neared a potential breakout, reclaiming $2.40 with $2.69 as the next resistance. Meanwhile, the SEC acknowledged four new Solana ETF applications, fueling speculation of broader altcoin ETF approvals. Crypto-linked stocks slumped, with Coinbase (-4.75%), MicroStrategy (-4.53%), and Riot Blockchain (-4.21%) under pressure. Traders await further regulatory signals and macroeconomic cues for market direction.
Fixed Income
The US yield curve bear steepened yesterday as Fed Chair Powell made it clear that the Fed is in no hurry to lower rates, which helped anchor the short-end of the yield curve, while longer US treasury yields dribbled higher ahead of today’s January US CPI data. The recent break below the pivotal 4.50% level in the US 10-year benchmark has failed thus far, as it traded as high as 4.55% overnight after backing above 4.50% in yesterday’s session. US Treasury Note auction up late today and a 30-year T-bond auction tomorrow.
The Japanese government bond yield curve also bear steepened as the 5-year JGB benchmark hit the 1.00% level for the first time since 2008 and the 10-year benchmark nearly reached 1.35%, the highest since 2011.
Commodities
Gold rose sharply to new all time highs, posting a 2942 high in US dollar terms before retreating sharply and trading below 2890 this morning, with resistance to new highs possibly driven by the back-up in long US treasury yields. Silver suffered a steep sell-off to as low as 31.25 before rebounding to 31.85 in early trading today. Key resistance around 32.50 there after the recent rally was rebuffed there.
Crude oil continued its rallies off the lows of late last week ahead of the weekly US DoE inventory report today. April Brent trades above USD 76.50 this morning, with March WTI at USD 73.00.
- US Natural gas has risen back above USD 3.50 for the March contract as storage levels have dropped below the 5-year average in recent weeks on cold US weather. European natural gas trades at the highest levels since early 2023, hitting above EUR 58 per MWh as a cold snap is set to hit Europe amid rapidly depleting inventories, which stand at 49% for the EU versus 67% for this time last year.
Currencies
JPY crosses continued a vicious reversal higher overnight as the Japanese yen weakened across the board, in part on the pressure from long US treasury yields backing up after the recent drop below the 4.50% level for the US 10-year benchmark proved a red herring so far for JPY bulls, as it backed up toward 4.55% yesterday.
Despite the steep rally in USDJPY, the US dollar traded weakly elsewhere, with AUDUSD having a look above the locally important 0.6300 area overnight before retreating, while EURUSD managed a high of 1.0381 before easing back overnight.
For a global look at markets – go to Inspiration.
