Market Quick Take – 12 May 2025
Market drivers and catalysts
Equities: US-China trade optimism; European markets poised higher; Asian markets broadly positive; pharma under pressure
Volatility: Significant decline in VIX futures; markets calmer ahead of key US economic data
Digital assets: Bitcoin stable; crypto response muted; select crypto stocks outperforming
Fixed Income: Mild sell-off in US treasuring on the US-China trade talk news
Currencies: USD firmed sharply on positive US-China trade talk spin, but strength later faded
Commodities: Trade talks lift energy and industrial metals as gold slumps
Macro events: US Federal Budget Balance, Australia Consumer and Business Confidence
Macro data and headlines
The US and China claimed “substantial progress” in trade talks carried out in Switzerland over the weekend. China’s chief negotiatsor, Vice Premier He Lifeng, called the talks an “important first step”. Very few specifics are available on what was agreed, but He said that a mechanism for further talks was agreed, which on the US side would be led by Treasury Secretary Scott Bessent.
A joint US-China statement with further details on trade talks is expected some time today.
US President Trump claimed that he could lower drug prices in the US by 30% to 80% by requiring that the US pay the same price for drugs as the countries that pay the lowest price for the drug elsewhere in the world.
Ukrainian president Zelenskyy offered to meet Russian President Putin in person later this week in Istanbul for trade talks.
Japan is taking a stand on US auto tariffs, as Prime Minister Ishiba said that the country won’t agree to any trade agreement with the US that excludes an agreement on autos. Japan’s lead trade negotiator Ryosei Akazawa said he hopes that the two sides can move to an agreement in June.
Macro calendar highlights (times in GMT)
1800 – US Apr. Federal Budget Balance
0030 – Australia May Westpac Consumer Confidence
0130 – Australia Apr. NAB Business Confidence
Earnings events
Monday: Constellation Software
Tuesday: Softbank, Nu Holdings
Wednesday: Tencent, Cisco Systems, Sony
Thursday: Walmart, Deutsche Telekom, Allianz, Mitsubishi Financial, Deere, Applied Materials
Friday: Richemont
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
US: US stock futures surged sharply Monday following positive developments from US-China trade talks in Geneva. Futures for the Dow and S&P 500 gained over 1%, and Nasdaq 100 futures rose nearly 2%. Treasury Secretary Scott Bessent described the talks as "productive," fueling optimism despite continued uncertainty about broader tariff policies. Investors are closely watching key economic data this week, particularly consumer inflation figures Tuesday and retail sales Thursday, to gauge the impact of recent trade tensions. Last Friday, the S&P 500 closed slightly lower (-0.07%).
Europe: European equities are set for strong gains Monday, buoyed by easing US-China trade tensions. Euro Stoxx 50 and Stoxx 600 futures rose 1% and 0.8%, respectively. Last Friday, European indices closed higher on optimism surrounding the trade talks, with STOXX 50 up 0.4%, and Germany’s DAX and France’s CAC gaining 0.63% and 0.64%, respectively. Financials like Mediobanca and consumer discretionary stocks such as BMW and LVMH were top performers, reflecting positive investor sentiment ahead of key earnings from UniCredit today.
UK: UK stocks are anticipated to open higher Monday, tracking global optimism. FTSE 100 futures increased by 0.3%. Key news includes Banco Santander rejecting an £11 billion bid from NatWest for its UK retail operations. Oil prices firmed amid US-China optimism, while gold retreated as safe-haven demand declined. Last Friday, the FTSE 100 gained 0.27%, supported by strong earnings from British Airways owner IAG (+2.38%) and upbeat corporate developments.
Asia: Asian markets rallied Monday as US-China trade negotiations concluded positively. Hong Kong’s Hang Seng jumped 1.4%, marking its eighth consecutive gain. China's CSI 300 and Shanghai Composite added about 1.1% and 0.9%, respectively. India's Nifty soared nearly 3% after a US-brokered ceasefire with Pakistan held firm. However, pharmaceutical stocks dropped after President Trump announced plans to cut drug prices significantly, impacting key regional pharma companies negatively.
Volatility
Volatility eased significantly with positive US-China trade developments. VIX futures declined sharply (-5.45%), reflecting reduced market anxiety. On Friday, the VIX closed at 21.90, slightly lower amid declining uncertainty. Investors remain cautious, however, preparing for key economic data this week, especially the US CPI release tomorrow. Earnings from Walmart will also provide insights into the retail sector, potentially influencing volatility further.
Digital Assets
Crypto markets displayed muted reactions despite significant trade optimism, with Bitcoin barely positive at $104,333 (+0.20%) and Ether slightly negative at $2,511 (-0.13%). The subdued crypto response contrasts with equities' bullishness, suggesting traders seek more concrete details from the US-China negotiations. However, select crypto-related stocks performed strongly, notably Marathon Digital (+10.29%) and CleanSpark (+5.99%), signaling continued speculative appetite.
Fixed Income
US treasury yields rose on the friendly tone of statements emerging from the US-China trade talks, with the US 10-year benchmark yield a couple of basis points above Friday’s close, trading near 4.4% late in the Asian session on Monday, while the 2-year benchmark likewise up at multi-week highs slightly above Friday’s close, trading just above 3.90%.
US high-yield corporate credit spreads were little changed Friday, with the Bloomberg High Yield spread to US treasuries indicator we track widening a single basis point to 343 basis points on Friday.
Commodities
Gold trades sharply lower with US-China trade progress lifting both the US dollar and US Treasury yields, while a ceasefire between Pakistan and India seems to be holding, and Ukraine challenging Putin to engage in talks this week. Hedge funds cut their COMEX futures long to a fresh 14-month low last week, highlighting the need for Asian demand to avoid a bigger correction, with focus once again on USD 3,200.
Pro-cyclical commodities like crude oil and copper, but also silver and platinum, trade firmer with sentiment boosted by the trade talks between the world’s top two economies, potentially lowering the economic fallout from the current trade war.
Soybeans, the hardest-hit crop in the US-China standoff, trade higher while corn and wheat continue to lose ground amid weak exports and favourable planting conditions across the US Plains. In addition, an expanded Brazil soybean acreage and upcoming corn harvest keep the upside limited for now.
Currencies
The US dollar firmed sharply as both sides in the US-China trade talks claimed progress, with EURUSD retesting the 1.1200 support and USDJPY lifting back to the recent highs above 146.00 before the USD rally faded again slightly. USDCNH dropped back toward 7.22 after a Friday high above 7.25.
Key data from the US this week includes the April CPI report up tomorrow and the April Retail Sales report on Thursday.
For a global look at markets – go to Inspiration.
