Market drivers and catalysts
· Equities: Tech slump drags US markets lower; DAX hits record; tariff relief boosts autos
· Volatility: VIX surges 13.4% on tariff uncertainty; sticky volatility ahead of macro events
· Digital Assets: BTC -4.8%; Trump's Bitcoin reserve plan underwhelms; crypto ETFs see outflows
· Currencies: USDJPY testing cycle lows after stutter-step moves. EURUSD above 1.0800.
· Fixed Income: European yields spiked further before easing well off highs. US 10-year back below 4.25%
· Commodities: Tariff angst drive strong week for industrial and precious metals
· Macro events: US February jobs report
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
Macro data and headlines
· Confusion over Trumps approach to tariffs continue after the president signed an amendment to the tariffs on Mexico and Canada, exempting USMCA-compliant products from levies until 2nd April.
· ECB cut interest rates by 25 basis points, lowering the deposit rate to 2.50%, refinancing rate to 2.65%, and lending rate to 2.90%. This eases borrowing costs and reflects updated inflation assessments. Inflation is expected to average 2.3% in 2025 and 1.9% in 2026. Growth forecasts were reduced to 0.9% for 2025 and 1.2% for 2026 due to weak exports and investment.
· US employers announced 172,017 job cuts in February 2025, the highest since July 2020 and the largest February total since 2009. Factors include government actions, cancelled contracts, trade war fears, and bankruptcies. The Government sector led with 62,242 cuts, followed by retail (38,956) and tech (14,554). Year-to-date cuts reached 221,812, the highest since 2009.
· US initial jobless claims fell by 21,000 to 221,000 in late February, below the expected 235,000. Recurring claims rose by 42,000 to 1,897,000, close to the forecasted 1,880,000, showing a tight labor market. Federal employee claims increased by 1,020 to 1,634 amid DOGE firings.
· The US trade deficit hit a record $131.4 billion in January, a $36 billion increase on the prior month, reflecting front loading of orders ahead of tariffs. Inbound shipments of finished metal shapes, a category that includes bars of precious metals, accounted for nearly 60% of the monthly increase as traders scrambled to rush bullion to New York depositories.
Macro calendar highlights (times in GMT)
1230 – Sweden Riksbank Governor Thedeen to speak
1330 – Canada Feb. Employment Data
1330 – US Feb. Unemployment Rate
1330 – US Feb. Nonfarm Payrolls Change
1330 – US Feb. Average Hourly Earnings
Earnings events
· Today: Constellation Software
Next week:
· Monday: Oracle
· Tuesday: Volkswagen, Viking Holdings
· Wednesday: Adobe, Inditex, Rheinmetall, Lennar
· Thursday: Docusign
· Friday: BMW, Daimler Truck
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
· US: US equities plunged on Thursday as trade policy uncertainty rattled markets. The S&P 500 (-1.78%), Nasdaq (-2.61%), and Dow Jones (-0.99%) hit multi-month lows, led by tech sector weakness. Marvell Technology (-19.8%) issued a poor AI-driven sales outlook, dragging Nvidia (-5.7%), Broadcom (-6.3%), and AMD (-2.8%) lower. Trump’s last-minute tariff delay failed to reassure investors, with fears of stagflation and slowing growth persisting. Futures show a modest rebound ahead of today’s Nonfarm Payrolls report, expected to show 159K new jobs. Broadcom (+12%) surged after hours on strong AI spending guidance, while HP Enterprise (-20%) fell on weak forecasts and job cuts.
· Europe: European stocks were mixed, with DAX (+1.67%) hitting a record high at 23,380, driven by tariff relief on auto imports. Automakers surged 2.7%-5%, while Deutsche Post (+12%) soared on a cost-cutting plan. Lufthansa (+7%) jumped on a positive outlook. The FTSE 100 (-0.83%) struggled as Melrose (-17.3%) and Rentokil (-10%) dragged the index lower. The CAC 40 (+0.64%) gained, led by Teleperformance (+6.98%) and ArcelorMittal (+6.6%). The ECB cut interest rates by 25bps, but signaled caution on further moves, citing fiscal uncertainty.
· Asia: Asian markets were volatile, mirroring Wall Street’s downturn. Japan’s Nikkei (-2.1%), TOPIX (-1.2%), and ASX 200 (-1.6%) fell as investors reacted to Trump’s trade policy shifts. The Hang Seng (-0.41%) pulled back after hitting a three-year high of 24,468, up 6% for the week, driven by optimism over China’s 5% GDP target and fiscal stimulus plans. KOSPI (-0.4%) slid as chipmakers SK Hynix (-1.4%) and Samsung Electronics (-0.4%) weighed on sentiment. China’s CPI and PPI data are due this weekend, with traders eyeing inflation trends.
Volatility
The VIX (+13.4%) surged to 24.87, reflecting market jitters over Trump’s tariff flip-flop and upcoming macro events. Intraday swings were sharp, with the VIX1D (+40.8%) spiking to 31.13. UBS strategists expect elevated risk premia, warning that a swift drop in volatility is unlikely. April VIX straddles with upside calls are favored for capturing persistent volatility. With Nonfarm Payrolls, Fed speeches, and Trump’s economic address today, implied volatility may remain sticky.
Digital Assets
Bitcoin (-4.8%) fell to $88,296, with altcoins broadly lower, as Trump’s Bitcoin strategic reserve announcement failed to excite markets. The reserve will consist of seized BTC holdings (~200K BTC) but won’t involve government purchases, disappointing traders. Ethereum (-5.1%), Solana (-4.6%), and XRP (-flat%) struggled as crypto ETFs saw record outflows. CME futures basis remained weak, signaling institutional caution. All eyes are on today’s White House crypto summit, where Trump may offer further policy clarity.
Fixed Income
· European yields rushed higher still yesterday before support for the market came in, with German 10yr Bund yield hitting 2.93% intraday before retreating 10 basis points into the close. ECB guidance on further policy moves looked nominally hawkish on forward guidance for further rate cuts, as the bank clearly does not want to pre-commit to further easing, but the market continues to price the ECB to cut rates twice more this year as it forecast weak growth for this year.
· US treasury yields rose to new highs for the week before rolling over ahead of today’s jobs report. The 2-year treasury benchmark at 3.93% this morning and the 10-year at 4.24% after as high as 4.34% yesterday.
Commodities
· The commodities sector is heading for a weekly gain primarily due to gains across precious and industrial metals driven by tariff angst lifting futures prices on the COMEX exchange in New York. In energy, an ongoing slump in crude and fuel products on global demand concerns was offset by gains in natural gas, while China countermeasures against Trump’s tariffs hurt the grains sector, especially corn.
· Crude prices are heading for their biggest loss since October with Brent trading near a four-year low below $70, weighed down by fears Trump’s trade policies impacting global growth, and a plan by OPEC+ to gradually start reviving production from next month. Further weakness may force high-cost production to be curbed, eventually supporting prices.
· Copper prices in New York continue to trade at a near 10% premium to London as traders try to estimate the eventual level of import tariffs, threatened to be as high as 25%. For now, the premium holds steady as arbitrage traders—just like gold and silver—rush copper to New York to take advantage of this discrepancy.
Currencies
· Consolidation in the enormous euro rally higher has been very shallow in EURUSD as the pair peaked at 1.0853 yesterday and retreated to 1.0766 overnight, only to rebound well back above 1.0800 into early European hours. EURCHF was far more volatile in relative terms, trading as low as 0.9515 after posting a 0.9636 high yesterday.
· As support for the bond market came in yesterday, the Japanese yen’s fortunes were revived, and USDJPY fell back toward the cycle lows near 147.40
· Trump’s fresh move to delay tariffs against Mexico and Canada that are covered by the USMCA trade deal, including autos, saw MXN and CAD firmer versus the US dollar.
For a global look at markets – go to Inspiration.
