Market drivers and catalysts
Equities: Trump delays auto tariffs, stocks rally; DAX +3.5%, STOXX 50 +1.9%, Hang Seng +2.87%; China tech stocks gain on stimulus
Volatility: VIX -6.72% to 21.93, short-term volatility eases; market futures stable; ECB rate decision & Broadcom earnings ahead
Digital Assets: Bitcoin +6.2% to $92,532, Trump’s crypto reserve speculation fuels rally
Currencies: Gap-like repricing of the euro higher on the historic surge in European yields
Fixed Income: An historic day in Europe as German 10-year yield rises 30 basis points, most since 1990
Commodities: Steady crude prices. Copper rally lifts silver.
Macro events: EU Summit, ECB meeting and US jobless claims
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
Macro data and headlines
An historic day for Europe on the EU and Germany’s plans for a vast fiscal expansion, particularly Germany coming Chancellor Merz move to fund both EUR 500 billion in infrastructure (near 12% of current German GDP) over the next 10 years as well as additional defence spending that would mostly be exempt from “debt brake” rules, with a move to alter the German constitution to allow these changes. German 10-year bunds rose 30 basis points, the largest one-day gain since pre-unification in 1990, taking global yields higher with the violence of the move.
Germany called for the EU to change fiscal rules to allow countries to raise the level of spending on defence without violating EU rules on budget deficits. An EU Summit today will see further measures on defence discussed.
The White House announced that Trump granted a one-month delay on new tariffs for U.S. automakers complying with USMCA regarding Mexico and Canada.
US private businesses (ADP) added 77K workers, the smallest increase in seven months and below the 140K forecast. The service sector gained 36K jobs, with losses in trade/transportation/utilities (-33K) and education/health (-28K). The goods sector added 42K jobs, mainly in construction (26K) and manufacturing (18K), while natural resources/mining lost 2K jobs.
US ISM Services PMI rose to 53.5 in February 2025 from 52.8 in January, exceeding the 52.6 forecast. This marks faster growth in the services sector, with business activity, new orders, employment, and supplier deliveries expanding for the third consecutive month. Inventories and backlog of orders rebounded, while price pressures increased.
Macro calendar highlights (times in GMT)
EU Summit today
0830 – Germany Feb Construction PMI
0930 – UK Feb Construction PMI
1315 – ECB Rate Decision
1330 – US Jan Trade Balance
1330 – US Weekly Initial Jobless Claims
1345 – ECB’s Lagarde Holds Press Conference
Earnings events
Today: Broadcom, Costco, Merck, Canadian Natural Resources, Deutsche Post,
Friday: Constellation Software
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
US Markets: US equities rebounded strongly on Wednesday after President Trump granted a one-month exemption on auto tariffs for Mexico and Canada, easing trade war concerns. The S&P 500 rose 1.12%, the Nasdaq 100 gained 1.36%, and the Dow Jones jumped 1.14%. Automakers led the charge, with General Motors (+7.2%), Ford (+5.8%), and Stellantis (+9.2%) surging on the news. Despite mixed economic data—strong services sector numbers but weak private payrolls—investors piled into consumer discretionary and industrial stocks. However, Marvell Technology (-14%) and MongoDB (-16.5%) fell sharply in extended trading after disappointing earnings.
European Markets: European equities staged a major rally, with the STOXX 50 up 1.9% and DAX surging 3.5%, nearing record highs. Optimism over Germany’s €500 billion infrastructure and defense fund fueled gains, with HeidelbergCement (+17.2%), Deutsche Bank (+11.9%), and Commerzbank (+11%) among top movers. Defense stocks remained strong, including Thales (+7.6%) and Leonardo (+5.1%), as governments expanded military budgets. Auto stocks also climbed, boosted by reports of possible US tariff relief. Meanwhile, Adidas (-2.4%) lagged on weaker revenue projections, and the FTSE 100 ended flat, pressured by a strong pound and falling oil prices.
Asian Markets: Asian equities rallied as Trump’s auto tariff delay lifted global risk sentiment. Hong Kong’s Hang Seng surged 2.87%, led by tech stocks after China reaffirmed its 5% GDP growth target and announced new AI and consumption stimulus. Alibaba (+6.2%) and Tencent (+4.7%) soared, while CK Hutchison jumped 25% after selling Panama Canal ports to a US-backed consortium. Japan’s Nikkei (+1.1%), South Korea’s KOSPI (+0.9%), and India’s Nifty 50 Futures (+0.1%) followed suit, while Australia’s ASX 200 (-0.6%) lagged. Despite US-China trade tensions, markets saw AI and stimulus as key drivers for Chinese equities.
Volatility
Market volatility eased as stocks rebounded. The VIX fell 6.72% to 21.93, slipping below 23 as investors digested tariff relief news. Short-term volatility measures, VIX1D (-10.23%) and VIX9D (-7.62%), saw sharp declines. However, rolling activity in VIX futures continued, with March 30/60 call spreads rolled into May 35/75 and April 42.5 calls trading heavily. Futures markets were steady, with S&P 500 futures (ES1) holding at 5848.50 and Nasdaq futures (NQ1) at 20,632.75. Key risk events include the ECB rate decision and Broadcom’s earnings later today.
Digital Assets
Bitcoin surged 6.2% to $92,532, extending its rally amid speculation that Trump will unveil a Bitcoin reserve plan at an upcoming White House crypto summit. Crypto stocks followed suit, with MicroStrategy (+12.1%), Coinbase (+4.7%), and Riot Platforms (+5.6%) climbing. Other major cryptos rallied, including Ethereum (+6.4%), XRP (+3.9%), Solana (+5.7%), and Cardano (+2.3%). Meme tokens saw renewed interest, with Dogecoin (+9.1%) and $TRUMP (+5.6%) rebounding. Uncertainty remains over the structure of Trump's proposed Bitcoin reserve, as policymakers remain divided.
Fixed Income
An historic day for European bonds yesterday after the dramatic change of tone from Germany on the need for a massive fiscal expansion to fund infrastructure and defence priorities, as well as EU-level discussions of similar on defence. German 10-year Bund yields rose 30 basis points to close the day at 2.79, the largest one-day gains in that yield since 1990. At the front-end of the yield curve, the 2-year German Schatz yield rose over 20 basis points to close at 2.25% as the market repriced the ECB to cut fewer times in this cutting cycle. Germany-France 10-year yield spreads dove just below 70 basis points, the tightest the spread has been since September of last year. The 3.03% level in 10-year bunds is the highest post-GFC
US treasury yields were dragged higher by the seismic shift in European yields as US data was mixed, including a slightly better than expected ISM Services number (with a hotter than expected Prices Paid reading as noted above), but weaker than expected ADP payrolls growth.
Japanese government bond yields were also pulled higher by the seismic shift in EU yields, with the 10-year JGB yield rising 7 basis points to 1.52%, a new 15-year high. Chart focus there is on the 2.0% level, which was the highest level approached and touched on several occasions but never broken since the 1990’s
Commodities
Crude prices trade steadily following a four-day decline, with trade war-related demand concerns still weighing on prices, leading several banks to downgrade their 2025 price forecasts. We maintain a USD 65-85 range in Brent, with a potential drop lower eventually curbing supply, thereby adding fresh support.
HG copper prices' premium over London remains elevated, thereby supporting a scramble to ship metals to the USA ahead of potential tariffs, threatened by Trump to reach 25%. Silver enjoyed the tailwind from this rally, with the XAU/XAG ratio falling back below 90.
Gold holds near record levels, supported by tariff turmoil, while a sharply weaker US dollar has more than offset a historic surge in European bond yields as fiscal expansion looms. Meanwhile, the number of expected US rate cuts this year now exceeds three 25 bps cuts from less than one back in January.
Agriculture traders are watching for potential cancellations on contracts from China and Mexico that would put roughly 12 million tons of American crop sales at risk.
Currencies
The euro ripped higher on the historic day for EU yields on plans for a German fiscal bazooka, with possible more to come on the EU level on defence spending. EURUSD rose above 1.0800 overnight after trading below 1.0400 at the start of the week. Other Euro pairs caught fire yesterday as well, with EURCHF rising over 1.5% and trading above 0.9600 this morning, its highest since July of last year. EURGBP and EURJPY also rose sharply.
With global yields spiking, the JPY rally has been sidelined, though it did manage to pull higher versus the US dollar, with USDJPY mired just below 149.00 as the 148.50 area has proven difficult to break.
The Trump move to delay tariffs on cars imported from Mexico and Canada has the market believing that the remaining tariffs will prove temporary, helping CAD and MXN to rally against the weak US dollar. Canada says it won’t remove its tariffs until all US tariffs have been lifted as the political temperature between the US and Canada remains high.
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