Market drivers and catalysts
Equities: Tech and banks lifted the U.S.. Europe rose on defence and semis. Asia firm with Japan and Hong Kong strong on policy hopes
Volatility: VIX drops to 18. Calm returns
Digital Assets: Bitcoin -2.6%. ETH -2.9%. Macro and ETF flows drive sentiment
Fixed Income: Japan’s government bonds rally as LDP’s Takaichi set to become PM
Currencies: USD strong across the board, JPY weakest as LDP’s Takaichi set to become PM
Commodities: Strong gold rebound is met with fresh profit taking
Macro events: UK PSNB & Canada CPI
Macro headlines
Japan has a new Prime Minister as LDP leader Sanae Takaichi is set to become the country’s first female prime minister after a vote in the lower house that saw her winning a slim majority of four votes. The LDP will team up with the Ishin party in a minority coalition. Takaichi plans to appoint Toshimitsu Motegi as Foreign Minister and Minoru Kihara as Chief Cabinet Secretary.
The US and Australia have signed a pact to boost America's access to rare earths and other critical minerals, aiming to counter China's control over supply chains. The agreement includes joint investment in mines and processing projects in Australia as the two nations pledge to protect their domestic markets from "unfair trade practices".
White House advisor Kevin Hassett expects the government shutdown to end this week but warned of "stronger measures" if not. The shutdown's third week sees Republicans pushing for a short-term funding bill while Democrats insist on extending ACA tax credits.
Small businesses tell U.S. Supreme Court that Trump tariffs are an illegal $3 trillion tax on American companies, urging the court to affirm the lower court ruling against the legality of tariffs. The tariffs remain in place for now, awaiting a ruling after the Supreme Court hears the case.
Macro calendar highlights (times in GMT)
US Government data are impacted by shutdowns and are likely to be delayed
0800 – UK Sept. Public Sector Net Borrowing (PSNB)
1230 – Canada Sept. CPI
Earnings events
Today: Netflix, GE Aerospace, Coca-cola, Philip Morris, RTX, Texas Instruments, Intuitive Surgical, Danaher Corporation, Capital One, Lockheed Martin, Chubb, Northrop Grumman, 3M, General Motors, Unicredit, Nasdaq
Wed: Tesla, SAP, IBM, Philip Morris
Thu: T-Mobile, Intel, Unilever
Fri: Procter & Gamble
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: S&P 500 +1.1%, Dow +1.1%, Nasdaq 100 +1.3% as earnings optimism and easing bank jitters supported risk appetite. Apple +4% on stronger iPhone 17 sell-through signals in the U.S. and China. Wells Fargo +3.3% and Citigroup +2.3% bounced as credit-stress fears faded into the results run-up. Tesla +1.9% firmed ahead of earnings. Focus now shifts to megacap guidance on AI capex and holiday demand.
Europe: STOXX 600 +1%, Euro Stoxx 50 +1.3%, FTSE 100 +0.5% as defence and tech led. Rheinmetall +6%, Hensoldt +7.9%, and Renk +6.8% rallied on rearmament momentum. Infineon +5.1% outperformed alongside SAP +3.3% and Siemens +2.2% as chips and industrial software advanced. Eyes turn to Brussels meetings and earnings cadence from Europe’s industrial and luxury bellwethers.
Asia: Prior local closes were broadly higher. Nikkei 225 +3.4% amid political tailwinds and pro-growth expectations; Hang Seng +2.4% to 25,859 on tech strength; Shanghai Composite +0.6%. Alibaba +4.9% and Tencent +3.2% paced Hong Kong, while BYD +1.6%. CATL reported Q3 net profit +41.2% y/y to RMB 18.5bn and revenue +12.9%, underscoring EV battery demand. Today’s session opens with sentiment anchored by trade de-escalation hopes.
Volatility
Volatility eased notably as markets found footing after last week’s turbulence. The VIX fell 12.3% to 18.23, retreating from the mid-20s spike triggered by banking and trade fears. Short-term measures like VIX1D (-38.9%) and VIX9D (-12.4%) confirm calmer sentiment across maturities, while equity indices rallied in response. The shift reflects renewed confidence ahead of heavy earnings releases, including Netflix, GE Aerospace, and Coca-Cola, as well as optimism around U.S.–China diplomacy.
SPX expected move: ±0.43% (≈29 points) for today around 6,735, suggesting moderate intraday swings within a steadier backdrop.
Digital Assets
Crypto markets softened overnight, tracking broader consolidation in risk assets. Bitcoin slipped 2.6% to around USD 107,700, weighed by ongoing U.S.–China trade uncertainty and modest ETF outflows. IBIT rose 4.1%, showing resilience despite sector-wide withdrawals, while ETHA gained 4.2% after recent inflows stabilised sentiment in Ethereum-linked products.
Among altcoins, ETH -2.9%, SOL -3.1%, and XRP -3.2%, highlighting beta-driven selling. Macro sensitivity remains high as investors position ahead of key inflation data and the Xi-Trump meeting later this month.
Fixed Income
US treasuries at the long end of the yield curve rallied, reversing about half of the Friday sell-off in a yield curve flattening move, with the benchmark 10-year treasury yield pushing back below 4.00% and near 3.98% this morning, while the 2-year treasury yield was steady near 3.46%.
US high yield credit spreads tightened amidst widespread strong risk appetite, with the Bloomberg measure of high yield credit spreads to US treasuries ending the week five basis points tighter at 288 bps.
Japan’s government bonds rallied as the new LDP leader Takaichi won the vote to become Prime Minister, reversing some of the prior day’s surge in yields. The benchmark 10-year JGB yield fell back two basis points to 1.656%.
Commodities
Gold rebounded strongly as traders bought the dip following Friday’s sharp selloff, before a third failed attempt to break higher above USD 4,380 drove some profit taking in Asia. Monday’s swift recovery came despite easing trade tensions and the prospect of a US government reopening, underscoring the persistent appetite for hard assets amid ongoing debasement concerns that continue to fuel strong demand from both ETFs and central banks.
Silver’s rebound was more measured, and with prices still up 72% year to date, talk is growing that the market may be nearing a consolidation phase. Mining stocks, however, remain on a tear, with ETFs tracking major gold and silver producers up 137% and 145% respectively so far this year.
Brent crude continues to hold above the key USD 60 level, even as signs of a growing global surplus emerge, with the number of tankers at sea climbing to a record high and a contango structure developing across much of the futures curve.
Currencies
The US dollar rallied and the Japanese yen sold off as new LDP leader Takaichi is set to become Japan’s first female prime minister as she favours more fiscal stimulus. USDJPY rallied to 151.46 as of early European hours, eking out a four-day high.
China came back from its long holiday today with a stronger than expected yuan fix, taking USDCNH sharply lower to the 7.13 area after trading above 7.15 briefly late yesterday.
