Market drivers and catalysts
Equities: US-China trade optimism; robust earnings drive EU gains; Tesla and SAP outperform
Volatility: VIX eases; sensitive to trade and earnings; key economic data ahead
Digital Assets: Bitcoin eases after recent rally; strong crypto stocks; new major Bitcoin SPAC announced
Currencies: The US dollar resurgent across the board as Trump administration seems hungry for détente on trade war risks, but sell-off eased overnight.
Fixed Income: US yields little moved amidst resurgence in risk sentiment on crosswinds for the treasury market from the latest developments.
Commodities: Crude drops on rising supply concerns, gold finds a fresh bid in Asia
Macro events: Germany Apr. IFO Business Climate survey, US weekly jobless claims,
Macro data and headlines
Risk appetite continued to surge yesterday in the wake of the softening of US President Trump’s rhetoric on tariffs against China late Tuesday, with further comments from Trump yesterday on , with US Secretary Bessent adding to hopes for a US-China trade deal as he touted the “opportunity for big deal”. Still, the 145% tariffs on Chinese exports remain (with significant carveouts for smartphones, laptops, semiconductors, TVs and other products).
While sentiment has risen on hopes for a détente in the US-China trade war, the Trump administration (or at least Bessent and White House press secretary Leavitt) declared that the US will not unilaterally lower the tariffs on Chinese imports and specifically denied a WSJ piece claiming that the US would lower the tariff levels to 60%. Further confusing things later in the day yesterday, Trump himself said that if no deal is reached with China, he will set a tariff level for China over the next two, three weeks.
US Treasury Secretary Bessent said that any trade deal with China could take 2-3 years, and that negotiations would have to start at a lower level than Presidents Trump and Xi. Bessent also said that the US was “very close” to a trade deal with India.
The S&P Global Flash US Composite PMI fell to 51.2 in April 2025 from 53.5 in March, pointing to the slowest private sector activity growth in 16 months. Services activity slowed (51.4 vs 54.4) while manufacturing improved (50.7 vs 50.2). Business expectations about the year ahead dropped to one of the lowest levels seen since the pandemic while prices charged for goods and services rose at the sharpest rate for just over a year, with an especially steep increase reported for manufactured goods, linked to tariffs.
Macro calendar highlights (times in GMT)
0800 – Germany Apr. IFO Business Climate survey
1230 – US Weekly Jobless Claims
1400 – US Mar. Existing Home Sales
1430 – EIA's Natural Gas Storage Change
1700 – U.S. Treasury to auction USD 44 billion 7-year notes
2330 – Japan Tokyo Apr. CPI
Earnings events
Today: Google, Procter & Gamble, T-Mobile US, Merck, Pepsico, Gilead, Comcast, Fiserv, Chubb, Bristol-Myers Squibb, Intel, Republic Services, Southern Copper, Agnico Eagle Mines, Keurig Dr Pepper, Freeport McMoRan
Friday: BYD, Abbvie, HCA Healthcare, Aon, Colgate Palmolive, Charter Communications, Schlumberger
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
US: US stocks rallied Wednesday, led by optimism after President Trump indicated potential tariff reductions on China and eased fears over Fed independence. The S&P 500 rose 1.67%, Nasdaq surged 2.5%, and Dow gained 1.07%. IBM fell nearly 7% after reaffirming conservative guidance, while Tesla soared 6.2% following Elon Musk's reduced governmental role. Futures remain stable this morning, reflecting cautious optimism ahead of crucial earnings reports including Alphabet, Intel, and Merck.
Europe: European equities closed significantly higher Wednesday with the STOXX 50 (+2.8%) and STOXX 600 (+1.8%) benefiting from softened US-China trade rhetoric. Germany’s DAX (+3.1%) was boosted by SAP (+10.6%), delivering robust Q1 results. France’s CAC 40 (+2.1%) gained, led by Eurofins Scientific (+12%), while UK's FTSE 100 rose 0.9%, supported by Croda International (+8.2%). Markets are expected to open cautiously Thursday, as investors digest mixed signals from global trade developments and local earnings reports.
UK: The FTSE 100 advanced 0.9% on Wednesday, marking its ninth consecutive session of gains. Croda International (+8.19%) led risers after reporting strong Q1 sales growth, offsetting declines in Fresnillo (-5.20%), impacted by reduced silver production. Investors remain cautious due to mixed PMI data, signaling the first decline in private sector output in 18 months amid global trade uncertainties and domestic economic pressures.
Asia: Asian markets mostly edged higher Thursday, driven by continued optimism over potential US-China tariff easing. Japan’s Nikkei 225 climbed nearly 1%, boosted by automotive and tech sectors, while Australia's ASX 200 rose 0.6%. Conversely, South Korea’s KOSPI (-0.6%) declined following an unexpected GDP contraction. Hong Kong’s Hang Seng fell 0.6%, breaking a three-session winning streak, as investors locked profits ahead of the Politburo meeting.
Volatility
Volatility eased slightly Wednesday as the VIX dropped 6.93% to close at 28.45, reflecting decreased immediate fear despite lingering uncertainties. Short-term volatility indicators (VIX1D and VIX9D) fluctuated notably, suggesting market sensitivity to policy and earnings outcomes. Volatility remains susceptible to sudden shifts tied to trade developments, economic data, and heavyweights like Alphabet and Intel reporting today.
Digital Assets
Bitcoin retreated slightly to $92,663 (-1.13%) after Wednesday’s surge driven by eased trade and Fed tensions. Ethereum (-1.3%) also moderated gains at $1,772. Crypto stocks showed strength with Coinbase (+2.53%), MicroStrategy (+0.79%), and Riot (+5.34%) performing well amid broader investor optimism following Trump’s crypto-friendly signals and significant industry investments such as Twenty One Capital’s upcoming $3.9 billion Bitcoin SPAC.
Fixed Income
The US President Trump and US Secretary of Treasury Bessent jawboning on making a trade deal with China saw US yields rebounding slightly on hopes of a better US growth outlook, though this is countered perhaps by others that would argue that removal of the tariff threat is supportive of more foreign appetite for US treasuries. The US treasury market largely sat out the significant volatility elsewhere, with the 2-year and 10-year US yield benchmarks gaining a few basis points.
The surge in risk appetite yesterday brought relief to high yield corporate bonds, with the Bloomberg indicator of the high-yield bond spread to US treasuries we track falling a chunky 26 basis points to hit a new three-week low at 371 basis points.
Commodities
Crude oil had its biggest two-week drop amid US-China trade tensions, and Kazakhstan prioritising national interests over OPEC+ quota obligations, causing tensions among the group, with several members calling for another bumper increase in June. Brent fell sharply after finding technical resistance around USD 68.65, currently trading near USD 66.
Gold rebounded in Asia following a near 7% slump from Tuesday’s blow out top, driven by Trump's softer stance on the trade war. Once again, as we have seen for several weeks now, the COMEX futures received a boost during the Asian session, highlighting where the main demand for gold is currently coming from.
Silver surged higher on Wednesday, with prices clawing back most of the loss seen during the Liberation Day market mayhem, and with gold seeing profit-taking at the same time, the XAUXAG ratio slumped 5.8% to trade back below 100.
The agriculture sector trades up on the week with strong gains in coffee, cotton, and livestock, offsetting broad declines across the grains sector led by corn and wheat
Currencies
The US dollar snapped back higher as risk sentiment continued to improve after US President Trump’s comments on lowering tariffs against China late Tuesday and after US Treasury Bessent’s comments on making a trade deal with China. EURUSD did not trade below the 1.1308 low from Wednesday’s Asian session, but was back below 1.1350 in the US session yesterday and overnight after rallying well above 1.1400. USDJPY squeezed above 143.57 yesterday just a day after sub-140.00 lows, before dipping back below 143.00 in the Asian session overnight.
The strongest safe haven currency of late, the Swiss franc, sold off sharply yesterday, with EURCHF testing above 0.9400 before finding resistance, while USDCHF rallied clear of 0.8300 yesterday before finding resistance after hitting a multiyear low of 0.8040 on Tuesday. Focus on EURCHF has been on the low 0.9200’s of late, where the exchange rate bottomed in August and November of last year, as well as during the recent episode as traders wonder whether the Swiss National Bank will consider intervention to prevent further CHF strength.
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