Market drivers and catalysts
Equities: US jobs shock, Europe rallies on tax relief, UK outperforms, Asia tech strength
Volatility: VIX drops, markets calmer, short-term risk low, options focused on tech
Digital assets: Bitcoin steady, ETHA up MoM, IBIT sees inflows, vol remains low
Fixed Income: US treasuries rally hard on weak US data. JGB’s also rally despite weak 30-year JGB auction
Currencies: USD sold off on weak data yesterday, but move was partially retraced overnight.
Commodities: Gold only got a mild bid on the weak US data
Macro events: ECB meeting, US Weekly Initial Jobless Claims, US April Trade Balance
Macro data and headlines
US May ADP Private Payrolls rose only 37k vs. the 114k expected, and the April data was revised slightly lower to 60k from 62k. This is the weakest US private payrolls growth, according to this measure, since a one-off blip in early 2023 and before that since the pandemic outbreak in early 2020.
The US May ISM Services PMI was out yesterday at 49.9 vs. 52.0 expected and 51.6 in April. It was the lowest reading since June of 2024. The Prices Paid index rose to 68.7 vs. 65.1 expected, the Employment index was at 50.7 vs. 49.0 expected and 49.0 in April, and the New Orders index dipped to 46.4 vs. 51.6 expected and 52.3 in April. That was the weakest New Orders reading since December of 2022.
The Bank of Canada decided yesterday to keep its policy rate unchanged at 2.75% as expected, with the statement suggesting there “may be the need” for further easing down the road as it fretted the threat to the economy from US tariffs and uncertainty on their scale and impact. The forward expectations have priced the BoC to cut by 25 basis points at the September meeting, with a further reduction priced as about 50% likely through the December meeting.
The German government approved a package of tax cuts for corporations that could total as much as EUR 46 billion in coming years. The package would include write-offs for up to 30% on movable assets, depreciation benefits for EVs and a lowering of the corporate tax rate, if only from 2028.
Macro calendar highlights (times in GMT)
0600 – Sweden May CPI
0900 – Eurozone Apr PPI
1130 – US May Challenger Job Cuts
1215 – ECB Rate Decision
1230 – US Apr. Trade Balance
1230 – US Weekly Initial Jobless Claims
1245 – ECB President Lagarde press conference
1400 – Canada May Ivey PMI
German Chancellor Friedrich Merz to meet US President Donald Trump in Washington today
Earnings events
Today: Broadcom, Lululemon, Samsara
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
US: US equities ended mixed as the S&P 500 closed flat, the Nasdaq rose 0.3%, and the Dow dipped 0.2%, breaking a four-day winning streak. Markets wavered after private-sector hiring came in far below expectations (ADP: +37k vs 115k est.), the slowest pace in two years. The services sector contracted for the first time in nearly a year, raising concerns about economic momentum. Policy uncertainty, including higher tariffs on imported steel and aluminum, weighed on sentiment. Gains in communication services, materials, and real estate were offset by weakness in energy and utilities. After-hours, Five Below and MongoDB jumped on strong earnings, while PVH fell after a negative forecast.
Europe: European markets closed higher, with the DAX +0.77% and CAC 40 +0.53%, buoyed by Germany’s €46bn tax relief package and signs of progress in EU-US trade talks. Sentiment was also supported by a positive revision to the Eurozone Composite PMI and easing bank borrowing costs. STMicroelectronics (+11%) and Infineon (+4.2%) led gains on semiconductor strength, while Airbus (+2.3%) rose on Chinese order speculation. UK’s FTSE 100 hit its fourth highest close ever (+0.16%) as the UK secured tariff exemptions and services PMI rebounded. French and German stocks shrugged off US tariff threats, with only moderate pressure on select exporters.
UK: The FTSE 100 rose 0.16% to 8,801, marking its fourth-highest close, as the UK was exempted from US steel and aluminum tariff hikes. Business activity recovered in May, driven by a rebound in services PMI (50.3), offsetting weak manufacturing. Babcock and Antofagasta led sector gains, while B&M Value Retail fell 14.7% after disappointing earnings. UK equities outperformed on a combination of favorable trade developments and resilient domestic economic data.
Asia: Asian markets were mixed. South Korea’s KOSPI surged 1.7%, hitting a 10-month high on a 51% jump in chip exports and post-election optimism. The Hang Seng (+0.6%) posted a second day of gains, lifted by tech and healthcare stocks amid speculation of an imminent US-China call. Japanese and Australian equities dipped on softer macro data. Investors across the region remained cautious ahead of US payrolls and amid ongoing trade policy risks.
Volatility
Volatility continued to ease, with the VIX slipping to 17.61, its third straight day of declines. Short-term volatility gauges moved lower as well, with the VIX9D dropping to 16.04, while the VIX1D ticked up slightly. These levels reflect calmer markets, as investors seem less concerned about big swings ahead of Friday’s key US jobs report. Options trading remains focused on the big tech stocks, and traders are positioning for relatively stable markets despite ongoing tariff headlines.
Digital Assets
Crypto markets traded sideways. Bitcoin held above $104,800 (+0.2%), Ether rose to $2,622 (+0.5%), while Solana and XRP slipped. BlackRock’s IBIT ETF ($59.64, -1.3%) logged a fifth straight inflow day as risk-averse allocators favored ETFs over spot. ETHA ($19.88, -0.1%) continues to gain institutional traction, up 46% month-over-month on options approval and inflows. Deribit’s DVOL hovers near a two-year low, underlining a summer lull in implied volatility. Crypto equities saw mixed moves: Coinbase (-1.1%), MicroStrategy (-2.4%), and Riot Platforms (+5.2%). Circle boosted its IPO size to $1.05bn, while JPMorgan eyes crypto ETF collateralization.
Fixed Income
US treasury yields fell sharply yesterday on the double whammy of weak May private payrolls data and a weak ISM services reading. Treasuries rallied across the curve, sending the 2-year eight basis points lower to its lowest close since early May at 3.87%, while the 10-year was pushed nine basis points lower to close below the 4.40% level for the first time since early May.
An auction of 30-year Japanese Government Bonds saw the weakest demand since 2023, but the benchmark dropped eight basis points overnight, mimicking the sharp move lower at the longest end of the US yield curve.
Commodities
Gold rebounded slightly yesterday on the weak US data as the US dollar sold off, with the strength in global sovereign bonds on the weak data pulling focus away from the precious metal. The area just below USD 3400 per ounce has developed as key resistance. Silver prices remain poised just below the critical multi-year highs of USD 35 per ounce.
Crude prices have pushed lower from the upper end of the recent range after Saudi Arabia lowered prices for Asian buyers of its output yesterday, with Bloomberg citing a drop in Saudi’s Arab Light by 20 cents, though some were expecting a larger price cut.
Currencies
The US dollar weakened on the back of the weak ADP private payrolls and ISM Services PMI yesterday, but the move has faded as all eyes are on tomorrow’s US jobs report and the May Nonfarm payrolls change. Today’s weekly initial jobless claims number could also attract attention after last week’s jump in claims and as the four week average of that measure has risen to its highest level, at 231k, since the summer of 2024.
USDCAD hit new lows since October of last year below 1.3700 after the weak US data and the somewhat indifferent Bank of Canada meeting. Canada’s economy is at risk from US tariffs and mortgage resets that are coming this year. Canada’s mortgages reset at 5-year intervals, and five years ago, a massive wave of refinancings were carried out as yields were crushed lower by the pandemic outbreak.
- The Japanese yen was weaker overnight after the weak demand at the 30-year JGB auction (see above), with EURJPY backing up above 163.30 overnight after a low of 162.90, while USDJPY traded 143.15 this morning after a 142.53 low overnight in what has been a choppy weak for that currency pair.
For a global look at markets – go to Inspiration.
