Key points
Equities: Nvidia earnings, PCE inflation in focus; Europe weak on German election uncertainty; China sinks as Trump tariffs return
Volatility: VIX climbs as hedging demand rises ahead of key catalysts
Digital Assets: Crypto sentiment deteriorates as Trump’s tariffs rattle markets
Currencies: Canadian dollar weaker as Trump’s tariffs remain on course. Euro sideways post-German election.
Fixed Income: US treasury yields dip to new lows for the year on weak risk sentiment
Commodities: Gold retreats from record highs, oil rises on Iran sanctions
Macro events: European wages, US Consumer Confidence, Australia CPI
Macro data and headlines
US President Trump said that tariffs for Canada and Mexico remain on schedule after initially delaying them in early February until March 4.
The US Trump administration is said to be seeking a tightening of restrictions on exports of high-end semiconductor chips and chip manufacturing equipment to China from US allies such as Japan and Netherlands, with Tokyo Electron and ASML Holding NV two companies in focus as their engineers are employed to maintain semiconductor manufacturing gear on site. A further restriction on the export of additional Nvidia chips is also a part of the discussions according to unnamed sources cited by Bloomberg.
The US withdrew a condemnation of Russia’s 2022 invasion of Ukraine at the United Nations and among G-7 countries. The US and Russia then both approved a US resolution at the UN calling for a swift end to the conflict without assessing blame.
Ukraine and the US said to be close to a deal on US access to Ukraine’s natural resources in exchange for US commitment to a “free, sovereign and secure” Ukraine and investment in the country and “lasting peace”.
Germany is discussing a EUR 200 billion defense fund as chancellor-in-waiting Friedrich Merz is already in talks with the left-center Social Democrats to approve an extraordinary spending package, before any government has evenbeen formed by the two parties.
Macro calendar highlights (times in GMT)
1000 – Euro Area indicator of negotiate wage rates
1100 – ECB’s Centeno to speak
1300 – ECB’s Schnabel to speak
1400 – UK Bank of England Chief Economist Huw Pill to speak
1400 – US Dec. Home Price Index
1500 – US Feb. Consumer Confidence
1800 – US Treasury to auction 5-year treasuries
0030 – Australia Jan. CPI
Earnings events
Today: The Home Depot, Intuit, Workday, Coupang, Keurig Dr. Pepper
Wednesday: Nvidia, Salesforce, Deutsche Telekom, Lowe’s, TJX, AB Inbev, Synopsys, CRH, Snowflake, Monster Beverage, Danone, Stellantis, Ebay
Thursday: Axa, Dell, EOG Resources, Autodesk, Eni, Swiss Re, HP, Warner Brothers
Friday: BASF, Holcim
Equities
US: Tech-led selloff continues as investors brace for Nvidia earnings, inflation data
US equities struggled on Monday, with the S&P 500 (-0.50%) and Nasdaq (-1.21%) posting their third straight daily losses. The Dow Jones (+0.08%) managed to hold gains. Nvidia (-3.1%) fell ahead of Wednesday’s earnings, while Palantir (-10.5%) dropped further, now nearly 30% off its highs. In contrast, Apple (+0.6%) rose after announcing a $500 billion US investment plan. Economic concerns deepened as the Dallas Fed manufacturing index fell into contraction, and the probability of a March Fed rate pause jumped to 96%. Markets are awaiting PCE inflation data later this week.
Europe: Stocks retreat as German election uncertainty weighs on sentiment
European markets closed lower, with STOXX 50 (-0.39%) and STOXX 600 (-0.1%) down amid cautious trading. DAX (+0.62%) outperformed after the CDU/CSU won Germany’s federal elections, though coalition talks could delay economic policy clarity. CAC 40 (-0.8%) lagged, led by losses in Schneider Electric (-6.9%), Legrand (-3.5%), and luxury names like LVMH (-1.5%). On the corporate side, Prosus (-9%) tumbled after announcing a €4.1B acquisition of JustEatTakeaway.com. Investors are now watching German GDP data and any policy shifts from the new government.
Asia: China, HK stocks sink as Trump trade policies hit sentiment
Asian equities faced heavy selling pressure, with Hang Seng (-1.28%) and CSI 300 (-0.77%) declining as the US tightened curbs on Chinese investments. Alibaba (-10.2%) and Baidu (-3.7%) led losses, dragging the Hang Seng Tech Index (-1.2%) lower. The PBoC’s CNY 300B liquidity injection was deemed insufficient, missing maturing loan levels. Meanwhile, Trump’s reaffirmation of tariffs on China, Mexico, and Canada fueled investor caution. With China’s PMI data due soon, traders are bracing for more volatility in the region.
Volatility
The VIX (+4.23%) edged higher to 18.98, while VIX futures dipped (-1.25%) in early trading. A surge in the Put/Call ratio (+16.5%) to 1.294 indicates increasing hedging activity. Nvidia’s earnings tomorrow and US consumer confidence data today are key catalysts. Despite recent equity losses, implied volatility remains contained, suggesting traders are cautious but not panicking.
Digital Assets
Bitcoin (-0.34% to $91,240) and Ethereum (-1.38% to $2,479) slid amid renewed trade war fears. XRP (-1.15%) and Solana (-2.25%) also weakened. Crypto-related stocks underperformed, with Coinbase (-3.53%), MicroStrategy (-5.65%), and Marathon Digital (-5.25%) hit hard. The Crypto Fear & Greed Index dropped to 25 ("Extreme Fear"), its lowest in months, following Trump’s tariff announcement. Market participants are closely watching Bitcoin’s $90,000 support level as sentiment remains fragile.
Fixed Income
US treasury yields poked to new lows for the year along much of the US yield curve as risk sentiment suffered again yesterday. The two-year benchmark treasury yield hit 4.14 as odds for a June rate cut from the Fed rose slightly and the 10-year benchmark dipped below 4.40%, trading 4.37% in early hours today.
Back from a long weekend overnight, Japanese bond yields gapped lower, with the 2-year dropping two basis points to 0.80% and the 10-year in a volatile session that saw it losing four basis points, trading 1.39% in afternoon trading in Tokyo.
- European yields edged lower at the front end of the curve yesterday as the market is still pricing just over three additional rate cuts (0.79%) from the ECB for the remainder of the year.
Commodities
Gold prices (-0.51%) pulled back after reaching an all-time high of $2,956.15, as profit-taking set in while safe-haven demand remained strong amid tariff concerns. President Trump confirmed tariffs on Canadian and Mexican imports will proceed, keeping inflation and trade war risks in focus. Analysts expect Fed policymakers to remain hawkish, which could limit gold’s upside.
- Meanwhile, oil prices (+0.40%) climbed for a second session, with Brent crude at $75.16 and WTI at $71.17, as fresh US sanctions on Iran raised supply concerns. Strong refining margins also provided support, but uncertain demand outlooks capped gains.
Currencies
The Euro’s attempt to rally on the German election result faltered as EURUSD shied away from key 1.0533 resistance, but the selling never took the pair back below 1.0450.
The Canadian dollar edged lower as US President Trump claimed US tariffs against the country’s export to the US remain on track, with the March 4 deadline coming into view next week. The Mexican pesotraded slightly softer as well, but seems less sensitive to the tariff issue as Mexico appears to be moving in compliance with the Trump administration as it is said to be studying ways impose tariffs on China to avoid the 25% US tariffs.
