Market drivers and catalysts
Equities: Trump tariff deadline approaches; US stocks recover; Nvidia and Tesla rebound; EU tech weak; defense stocks rally
Volatility: VIX drops 7.1%; markets stabilized; volatility hinges on trade war uncertainty and economic data
Digital Assets: Bitcoin rebounds 20% from last week’s lows; Trump’s crypto reserve fuels rally; XRP +31%, Cardano +69%; Crypto Summit this Friday
Currencies: USD mixed after starting the week off on a weak note. JPY rebounds
Fixed Income: Friday saw new local lows in US yields while Japanese yields are rebounding and eyeing cycle highs.
Commodities: Crude and gold trade steady after suffering a steep correction
- Macro events: Eurozone Feb. Flash CPI, US ISM Manufacturing
Macro data and headlines
The US Atlanta Fed GDPNow GDP forecast was out Friday for the month of February with a reading of -1.48% after a string of months of stability above 2% of late. Some of the negative reading was down to a ballooning trade deficit as Americans front-run the risk of incoming Trump tariffs.
US President Trump will host the first White House cryptocurrency summit on March 7th. He mentioned that the executive order on digital assets includes a strategic reserve featuring XRP, Sol, and ADA.Trump also highlighted that BTC and ETH, as key cryptocurrencies, will be central to the reserve and expressed his admiration for Bitcoin and Ethereum.
US Commerce Secretary Lutnick stated that Mexico and Canada have managed the border reasonably well. However, tariffs on Canada and Mexico will be imposed on Tuesday, March 4th, with President Trump determining the levels. Lutnick also mentioned that tariffs on China will proceed unless they stop fentanyl trafficking into the US.
The US trade deficit widened 25.6% to a record $153.3 billion in January with imports surging 11.9% to a record $325.4 billion, likely reflecting US companies securing supplies in advance of tariffs
China's NBS Manufacturing PMI rose to 50.2 in February 2025, indicating expansion for the first time in three months. This improvement was driven by post-Lunar New Year activity resumption and Beijing's stimulus measures. On Wednesday, the National People Congress will unveil the economic plan for 2025.
Earnings events
Tuesday: Crowdstrike, Autozone
Wednesday: Marvell Technologies, Adidas, Veeva Systems, Zscaler
Thursday: Broadcom, Costco, Merck, Canadian Natural Resources, Deutsche Post,
Friday: Constellation Software
Equities
US Markets: US equities rallied on Friday, with the S&P 500 +1.59%, Nasdaq +1.62%, and Dow +1.39%, recovering from earlier losses triggered by President Trump’s renewed tariff threats. Nvidia (+0.6%) rebounded despite a sharp selloff post-earnings, while Tesla (+3.9%) snapped a six-day losing streak. However, February was the worst month for the S&P 500 (-1.4%) and Nasdaq (-4%) since April 2024 and September 2023, respectively. Investors are watching the March 4 tariff deadline, where Trump is expected to implement new levies on China, Mexico, and Canada. Key economic events this week include Friday’s Nonfarm Payrolls report.
European Markets: European stocks ended February with a 3.2% monthly gain, outperforming US markets. However, Friday saw weakness, as ASML (-3.1%) and Infineon (-2.2%) dragged down the tech sector. Auto stocks recovered slightly, with Stellantis (+1%), while BASF (+1%) and Saint Gobain (+2%) rose on strong earnings. Investors remain cautious as Trump’s potential 25% tariff on EU cars looms. Defense stocks surged last week, with Rheinmetall (+8.4%) leading gains as EU nations propose a €500B defense spending boost. European inflation data due today could impact ECB rate expectations.
Asian Markets: Asian stocks had a mixed session. Hong Kong’s Hang Seng Index (-0.15%) struggled despite China’s upbeat PMI data, which showed the fastest manufacturing expansion in three months. The CSI 300 rose 0.5%, while Shanghai Composite climbed 0.3%, with markets hopeful that Beijing’s Two Sessions policy meetings will deliver economic stimulus. Tech stocks remained under pressure, with Horizon Robotics (-8.2%) and Geely Auto (-3.4%) among the biggest losers. Investors are also watching for potential Chinese countermeasures against US tariffs set to take effect tomorrow.
Volatility
Market volatility eased on Friday, with the VIX falling 7.1% to 19.63 (-1.50). The index briefly spiked above 22 before markets reversed into a strong rally. This week, volatility hinges on Trump’s trade war uncertainty and US economic data, including ISM and Nonfarm Payrolls. VIX futures are lower at 18.65 (-0.95%), while equity futures point to a positive start, with S&P 500 futures +0.27%, Nasdaq futures +0.41%, and Russell 2000 futures +0.71%.
Digital Assets
Bitcoin rebounded to $93,057, rising about 20% from last week’s lows, following news that Trump will include Bitcoin, Ether, XRP, Solana, and Cardano in a US strategic crypto reserve. The announcement triggered sharp gains in XRP (+31%), Solana (+15%), and Cardano (+69%), with traders speculating on potential institutional inflows and SEC approvals for XRP and Solana ETFs. Trump is expected to reveal further details at Friday’s White House Crypto Summit, a key event for market sentiment. The rally helped Bitcoin recover from its worst month since mid-2022, when it dropped 17% in February.
Fixed Income
US treasury yields opened trading higher after falling to new local lows on Friday. The 10-year benchmark treasury yield traded 4.23% this morning after testing 4.20% Friday.
European yields settled lower on Friday ahead of this Thursday’s ECB meeting, with a wide range of views evident in ECB speakers’ rhetoric, though another 25 basis cut is expected this week. The German 2-year yield traded as low as 2.0% on Friday, briefly touching new lows for 2025 before edging back higher. The 10-year German Bund closed almost unchanged a 2.41% after dipping to 2.37%
- Japanese government bond yields are back on the rise, with the 2-year JGB aiming for its highest daily close of the cycle just above 0.83%, while the 10-year is several basis points below its highest close for the cycle, trading near 1.41% in late Asian hours.
Commodities
Gold trades higher after its first weekly loss this year on fears that Trump's tariff plans will stoke inflation and lower economic growth, potentially causing stagflation, while raising expectations for FOMC interest rate cuts. Managing a bounce before testing key support around USD 2,800 points to continued underlying strength.
Crude remains stuck near lows amid fears a global trade war may negatively impact demand at a time when supply is ample, and OPEC+ considers when to start tapering production cuts. Weeks of selling have seen speculators abandon bullish bets in droves, and last week the WTI net long slumped to a 15-year low, potentially setting up a bounce once the technical or fundamental outlook improves.
Currencies
The US dollar closed Friday on a strong note ahead of Trump’s decision on whether to go ahead with 25% or perhaps somewhat reduced tariffs tomorrow against Canada and Mexico and the additional 10% tariffs threatened against China. But the US dollar weakened slightly in the early Asian session to start the week, perhaps in response to Trump’s moves to bolster the idea of creating a US cryptocurrency reserve. This took EURUSD back above 1.0400 after a close near 1.0370 Friday.
USDJPY trades slightly lower from Friday’s close and below 150.50 after testing the critical 151.00 resistance area today
