Market drivers and catalysts
Equities: Stocks surge on tariff optimism; tech rallies; futures cautious ahead of data
Volatility: VIX falls; VVIX lowest since July; mild caution returns
Digital Assets: Bitcoin slightly lower; crypto stocks rally; Mt. Gox transfers watched closely
Currencies: Dollar shows broad strength
Fixed Income: Treasuries fall on reduced haven demand and corporate issuance
Commodities: Gold holds above USD 3000. Crude at 3-week high
Macro events: Ger IFO, US New Home Sales & Consumer Confidence
Macro data and headlines
President Trump imposed a 25% secondary tariff on countries buying Venezuelan oil or gas due to Maduro's lack of progress on reforms, while extending Chevron's deadline to exit Venezuela, easing pressure after a prior 30-day wind-down order.
The S&P Global US Manufacturing PMI fell to 49.8 in March 2025 from 52.7 in February, below the expected 51.8, but the Services PMI came in much better at 54.3 vs 50.8 est. Output decreased after February's sharp rise, with fewer boosts from tariffs and nearly stalled new orders growth.
In March 2025, the HCOB Eurozone Manufacturing PMI rose to 48.7, the highest in 26 months, from 47.6, exceeding forecasts. Manufacturing expanded for the first time in two years. The Composite PMI increased to 50.4 from 50.2, below expectations. Manufacturing grew, service growth slowed, new orders declined, employment stabilised, inflation rates hit lows, and business confidence was at its lowest since November.
Fed’s Raphael Bostic said he now expects just one rate cut this year instead of two. He also told Bloomberg that it’s unclear whether tariffs will go beyond a one-time hit to prices.
Macro calendar highlights (times in GMT)
0900 – Ger March IFO Surveys
1400 – US Feb New Home Sales
1400 – US March Conference Board Consumer Confidence
1400 – Richmond Fed Manufacturing Index
Earnings events
Tuesday: McCormick & Co
Wednesday: Paychex, Cintas, Exor, Dollar Tree
Thursday: Lululemon, Hennes & Mauritz
Equities
US: US stocks surged Monday, buoyed by investor optimism over potential targeted tariff measures by the Trump administration. The S&P 500 jumped 1.76%, Nasdaq soared 2.27%, and the Dow Jones rose by 1.42%. Tech led gains, with Tesla (+11.9%), AMD (+7%), Nvidia (+3.2%), and Amazon (+3.6%) rallying. Strong preliminary PMI data showed robust services growth despite manufacturing contraction. However, Tuesday’s futures indicate a cautious tone, signaling slight pullback following the rally ahead of key consumer confidence and housing data.
Europe: European stocks reversed early gains to close flat to slightly down on Monday, with the DAX (-0.32%) and CAC 40 (-0.28%) slipping as tariff optimism waned. Germany’s PMI showed the strongest business growth in ten months, yet Bayer (-6.9%) tumbled on a $2.1 billion lawsuit verdict. UK’s FTSE 100 fell marginally (-0.10%) amid mixed economic data. Investors remain wary as details on Trump’s targeted tariffs remain uncertain.
Asia: Asian markets had mixed results Tuesday, driven by profit-taking and tariff uncertainties. Hong Kong’s Hang Seng (-2.03%) was dragged down by tech and EV stocks, notably Xiaomi (-5.4%) after an upsized share sale. Chinese indices also slipped slightly on valuation concerns. Conversely, Japan's Nikkei gained (+0.7%), supported by export stocks, and Australia's ASX 200 (+0.4%) rose modestly. Regional sentiment remains cautious despite Trump's potential tariff flexibility.
Volatility
Volatility eased notably as equities rallied Monday, with the VIX dropping to 17.48 (-9.34%), reflecting diminished investor anxiety. The VVIX, or “vol of vol,” fell sharply, hitting its lowest since July 2024, signaling expectations of reduced near-term market shocks. Tuesday morning shows mild caution, with S&P and Nasdaq futures slightly negative ahead of consumer confidence and housing data, though VIX futures indicate minor bullish sentiment.
Digital Assets
Bitcoin dipped slightly (-1.03%) to around $86,592 Tuesday after major transfers by defunct Mt. Gox raised mild concerns. Crypto-related stocks surged, with MicroStrategy (+10.43%), Coinbase (+6.94%), and Marathon (+18%) outperforming amid bullish investor sentiment. Ethereum fell marginally to $2,054.07 (-1.31%), while XRP and Solana were relatively flat. Trump's potential scaled-back tariff plans bolstered crypto markets initially, but volatility persists.
Fixed Income
US Treasury yields rose on reduced haven demand after Trump hinted at tariff relief for many countries. This was intensified by block futures trading and corporate issuance, with 16 firms raising nearly $25 billion. Yields rose by 6 to 9 basis points across the curve, with 2s10s and 5s30s spreads tightening. US 10-year yields trade at 4.327%, up 8 basis points from Friday's close
Commodities
Crude prices rose to a three-week high, supported by an improved risk sentiment, and after Trump threatened to impose a 25% tariff on nations purchasing crude from Venezuela. Focus on USD 74 in Brent, the February floor before prices slumped.
Gold fell as stocks, Treasury yields, and the dollar rose following better-than-expected US economic data and on speculation Trumps 2 April tariff attack would be more targeted, potentially limiting the economic fallout. However, once again support was found ahead of USD 3000, an increasingly important technical and psychological level.
Chicago and Paris wheat prices fell on Monday as traders monitored news from Ukraine and with more favorable weather expected in some wheat-growing regions globally, especially in France
HG copper fell after finding resistance ahead of USD 5.20, last year’s record high, with the premium over London narrowing to 13% as traders continue to estimate the eventual level of incoming tariffs on US copper imports.
Currencies
USD reached a three-week high after March's unexpected Services PMI surge offset manufacturing contraction. Trump plans new tariffs on autos, lumber, and chips, with potential exemptions for some countries.
EUR fell below 1.08 level amid profit taking and looming tariff threats, with mixed Eurozone PMI data.
JPY weakened further, with the USDJPY extending a recent run of gains to near 151, supported by rising US yields, and increased risk appetite.
TRY hit record lows against the USD while trading steady against the euro. Turkey’s central bank raised rates by 200 basis points to 46% to stabilise markets amid ongoing political turmoil.
