Market drivers and catalysts
Equities: Tech surge, DAX leads, tariff/trade optimism
Volatility: VIX falls, options market unwinds hedges
Digital assets: Bitcoin steady, IBIT/ETHA inflows strong
Fixed Income: US treasuries await US labor market data. Important 30-year JGB auction tomorrow
Currencies: USD rallies ahead of key labor market data, JPY weakest
Commodities: Gold sees profit taking. Crude holds near range top
Macro events: BOC Rate Decision, US ISM Services Index, Fed’s Beige Book
Macro data and headlines
Trump signed a Proclamation doubling steel and aluminium tariffs to 50%, effective today. UK tariffs remain at 25% as the 0% deal wasn't implemented in time, while other countries face 50% tariffs, per Bloomberg's Wickham.
Job openings increased by 191,000 to 7.391 million in April, showing labour market strength despite trade issues. The OECD cut its 2025 US growth forecast to 1.6% from 2.2% due to policy and tariff concerns. Beijing and Washington accused each other of breaking a trade truce, while Trump's plan to double steel and aluminium tariffs faced EU criticism.
US manufactured goods orders fell 3.7% to $594.6 billion in April 2025, the first drop in five months, against a forecasted 3% decline. Transportation equipment orders decreased by 17.1%, with nondefense aircraft and parts plunging 51.5% as tariff concerns led airlines to reduce demand for Boeing aircraft, which received only eight orders.
Eurozone inflation fell to 1.9% in May 2025 from 2.2% in April, below the 2.0% forecast, marking its first dip below the ECB's target since September 2024. This supports a rate cut, with services inflation at 3.2%, its lowest since March 2022, energy prices down 3.6%, and non-energy goods inflation steady at 0.6%.
- Elon Musk publicly criticised Trump’s signature tax bill as a “budget-busting abomination” with Republican fiscal hawks stepping up criticism of the massive fiscal package which will add about $2.5 trillion to the federal deficit over the next decade.
Australia's economy grew 0.2% in Q1, slower than expected, due to weak public demand and exports, which were impacted by extreme weather events. The Reserve Bank forecasts growth to hit 2.1% by year-end, driven by spending and lower borrowing costs, with the next cut priced in for July.
Macro calendar highlights (times in GMT)
0800 – Eurozone May (Final) Composite, Services PMIs
0830 – UK May (final) Composite, Services PMIs
1215 – US May ADP Employment Change
1345 – Bank of Canada Rate Decision
1345 – US May (Final) Composite, Services PMIs
1400 – US May ISM Services Inde
1430 – EIA's Weekly Crude and Fuel Stock Report
1800 – Fed Releases Beige Book
Earnings events
Thursday: Broadcom, Lululemon, Samsara
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
US: US stocks posted solid gains Tuesday, powered by tech strength and upbeat labor data. The S&P 500 rose 0.6%, Nasdaq 0.8%, and Dow 0.5%, marking the Dow’s fourth straight win. Nvidia surged 2.8%, reclaiming the world’s top market cap. Broadcom and Micron rallied as well. The JOLTS report showed job openings up to 7.39 million, reinforcing economic resilience. While CrowdStrike dropped 6.5% post-close on soft guidance, futures held steady ahead of more employment and services data. Trade optimism persists as investors await a Trump-Xi call and hope tariffs will be milder than feared.
Europe: European stocks edged higher Tuesday, as softer Eurozone inflation (1.9% in May) reinforced expectations of an ECB rate cut. DAX led with +0.7% to a one-week high, boosted by Airbus, Siemens Energy, and SAP. Political instability in the Netherlands and ongoing trade uncertainty limited further gains. France’s CAC 40 (+0.3%) and the FTSE 100 (+0.15%) both advanced, with industrials and tech among the top performers. The pending addition of Rheinmetall to the Euro Stoxx 50 reflects the region’s defense spending boom.
UK: The FTSE 100 climbed 0.15% to 8,787, its third consecutive gain, as investors watched for UK-US trade talks and digested weaker OECD growth projections. British American Tobacco rose 1.5% after raising its 2025 outlook, and Chemring Group jumped 6.7% on strong results. The index remains just below its record high, with energy and defense stocks driving momentum.
Asia: Asian equities advanced, led by South Korea’s KOSPI (+2.4%) after a decisive presidential election ended months of uncertainty. Japan’s Nikkei rose 1% and Hong Kong’s Hang Seng added 0.6%, buoyed by chip sector gains and hopes for a Trump-Xi call to revive trade talks. Chinese stocks were modestly higher despite manufacturing data signaling pressure from US tariffs. Risk appetite was supported by positive Wall Street leads and easing concerns over a global slowdown.
Volatility
The VIX fell 3.5% to 17.69 as equities rebounded, with option market activity showing traders unwinding ultra-short-term hedges ahead of Thursday’s ECB decision and Friday’s US jobs report. Realized volatility is trending lower, keeping option premiums subdued despite ongoing macro risks. The front end of the curve remains steep, but no panic signals—investors are cautious, not capitulating.
Digital Assets
Bitcoin hovered near $105,600 (+0.16%), while Ether climbed to $2,630 (+1.37%). BlackRock’s IBIT ETF rose 1.75% on solid inflows, and the new ETHA ETF jumped 3.8%, reflecting strong allocator demand for ETH exposure. Altcoins were mixed, with SOL and XRP posting modest gains. On-chain data suggests continued institutional accumulation, with crypto volatility muted and carry trades attractive. Trump’s Truth Social filed for a Bitcoin ETF, highlighting the crypto-politics crossover.
Fixed Income
- US treasury yields initially fell on Tuesday before rising after the April JOLTS job openings report showed an unexpected rise in job openings and hiring, the release cam just days ahead of Friday’s US payrolls report. The US 10-year benchmark yield trades at 4.45% after touching a 4.405% low on Tuesday. The Bank of Japan will buy bonds maturing in up to 5 years and between 10 and 25 years.
Heavy anticipation ahead of a sale of 30-year Japanese Government Bonds tomorrow after a recent weak auction of 20-year JGB’s spiked long Japanese bond yields and prompted the BoJ to lower the auction size of a 40-year JGB auction, which still saw tepid demand. The auction size for the 30-year has not been lowered relative to the prior auction (still at JPY 800 billion).
Commodities
Gold traded defensively on Tuesday before taking a small tumble after a surprisingly strong JOLTS report lifted the mood in equity markets as well as the US dollar. Overall, the correction from Monday’s peak near USD 3,400 has yet to challenge any key support levels, the first located around USD 3,320, but the bullish sentiment may suffer a bit ahead of Friday’s US jobs report. Silver holds above key support with traders focusing on the 12-year high near USD 35.
Crude’s two-day rally has taken prices near the top of their established ranges, supported by supply disruption risks from wildfires in Canada to sanctions elsewhere, short covering from wrong-footed speculators, and offsetting a looming supply glut and worries about demand amid an ongoing trade war. Ahead of the EIA’s weekly report, the API said US stockpiles fell 3.3 million barrels last week.
Currencies
The US dollar rallied yesterday, largely erasing the recent weakness ahead of key US labor market data through the end of the week, including today’s ADP payrolls change report and ISM Services Employment sub-index and capped off by Friday’s Nonfarm payrolls change and unemployment rate - all for the month of May.
The JPY has weakened across the board, perhaps on concerns for the fragility of the Japanese government bond market ahead of tomorrow’s highly anticipated sale of 30-year JGB’s (see above in Fixed Income).
For a global look at markets – go to Inspiration.
