Market Quick Take - 18 March 2025

Market Quick Take - 18 March 2025

Market drivers and catalysts

• Equities: Stocks extend gains; tech struggles; Fed meeting in focus; German debt vote; AI hype fuels China rally
• Volatility: VIX at 20.51; uncertainty lingers; Fed policy and tariffs remain key risks
• Digital Assets: Bitcoin -1.8%, but ETF inflows hit six-week high; Coinbase rises; SEC hearing looms
• Currencies: JPY crosses squeezed ahead of BoJ tonight, NOK rallied sharply
• Fixed Income: German Bund yields drop ahead of today’s Bundestag vote on huge fiscal package
• Commodities: Gold and crude rise on renewed MidEast tensions
• Macro events: Germany Mar. ZEW Survey, Canada Feb. CPI, Bank of Japan Meeting

The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.

Macro data and headlines

• US retail sales rose 0.2% in February 2025, recovering from a 1.2% decline in January but below the expected 0.6% rise. Seven categories saw declines, including food services (-1.5%) and gasoline stations (-1%). Non-store retailers led growth with a 2.4% increase.
• The NAHB/Wells Fargo Housing Market Index in the US, a measure of builder confidence in the market for newly built single-family homes, fell to 39 in March 2025, the lowest in seven months, down from 42 in February and below the forecast of 42. Current sales conditions dropped to 43, while buyer traffic decreased to 24. Builders face high material costs, tariff issues, and supply challenges like labour and lot shortages.
• The US NY Empire State Manufacturing Index fell to -20.0 in March 2025, the lowest since May 2023, below the expected -0.75. New orders and shipments fell, while inventories reached a two-year high. Employment and hours worked declined slightly, and input prices rose sharply.
• Trump and Putin will speak together today about ending the fighting in Ukraine, with a 30-day ceasefire being a key objective. However, an ongoing discussion on how to divide "assets" in Ukraine has sparked concerns among Ukrainian and European officials that Trump may offer concessions to Russia without Ukraine's consent, potentially weakening Ukraine's position and security.

Macro calendar highlights (times in GMT)

1000 – Germany Mar. ZEW Survey
1230 – Canada Feb. CPI
1230 – US Feb. Housing Starts and Building Permits
1315 – US Feb. Industrial Production
1700 – US 20-year Treasury Note Auction
0200-0300: Japan Bank of Japan Rate Announcement/Statement

Earnings events

• Wednesday: General Mills, Williams Sonoma
• Thursday: Accenture, Nike, Micron, Fedex, Lennar, Hapag-Lloyd, Darden Restaurants
• Friday: Carnival Cruise

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• US: Stocks Extend Gains, but Tech Lags
  US stocks continued their recovery on Monday as the Dow Jones (+0.85%), S&P 500 (+0.64%), and Nasdaq 100 (+0.5%) advanced. Softer-than-expected retail sales (+0.2%) fueled hopes of a Fed rate cut, but major tech stocks struggled—Tesla (-4.8%), Nvidia (-1.7%)—amid valuation concerns. Berkshire Hathaway hit a record high (+1.5%). Treasury Secretary Scott Bessent reassured markets, calling recent corrections “healthy” but warning of recession risks. The Fed’s policy decision on Wednesday remains the key focus, with rates expected to stay unchanged.
• Europe: Markets Rise Ahead of German Debt Vote
  European stocks edged higher, with DAX (+0.73%), STOXX 50 (+0.77%), and CAC 40 (+0.57%) posting gains. Investors are watching Germany’s constitutional vote on debt reform, aimed at increasing defense and infrastructure spending. The banking sector led gains, with BNP Paribas (+2.5%), Societe Generale (+1.7%), and UniCredit (+1.6%) rising. In corporate news, Phoenix Group (+10.69%) surged after upgrading its earnings guidance, while AstraZeneca (-0.75%) dropped amid a new $1B acquisition. Meanwhile, Chinese EV giant BYD is considering Germany for its third European plant, despite concerns over high costs and EU tariffs.
• Asia: China Stocks Surge on AI Optimism
  Asian markets rose as Hong Kong’s Hang Seng (+2.15%) and Japan’s Nikkei (+1.6%) rallied. Chinese tech stocks surged on growing AI confidence, with Baidu (+10%) launching new AI models and Alibaba (+4%) shifting focus to AI-driven growth. BYD (+6%) hit a record high after unveiling fast-charging EV technology. Warren Buffett’s Berkshire Hathaway increased its holdings in Japan’s five biggest trading houses, lifting their stocks. Meanwhile, geopolitical tensions in the Middle East weighed on sentiment, as Israel resumed airstrikes on Hamas.

Volatility

VIX Holds Above 20, Markets Brace for Fed Meeting
The VIX fell 1.26 points to 20.51, marking its 11th straight day above 20, a sign of persistent market caution. While recent market corrections have eased, volatility remains elevated as investors weigh Trump’s tariffs, recession fears, and interest rate policy. Wall Street strategists warn that volatility could rise further unless tariff clarity emerges by April 2. Despite lower VIX futures, uncertainty over global trade and geopolitics continues to keep risk sentiment fragile.

Digital Assets

Bitcoin ETFs See Best Inflows in Six Weeks
Bitcoin fell 1.82% to $82,472, while Ethereum (-1.42%) and XRP (-3.51%) also declined. However, US spot Bitcoin ETFs saw $274.6M in net inflows, the largest since February 4, signaling renewed institutional demand. Fidelity’s FBTC led with $127.3M, while BlackRock’s IBIT saw $42.3M inflows. Crypto stocks were mixed—Coinbase (+3.19%) rallied on positive ETF flows, while Marathon Digital (-1.59%) declined. Meanwhile, Trump’s SEC chair pick Paul Atkins faces a March 27 confirmation hearing, adding regulatory uncertainty to the crypto market.

Fixed Income

• European bonds rallied strongly yesterday ahead of the German Bundestag’s vote today on the vast infrastructure spending package and new fiscal rules that would allow a massive expansion of spending on defense via larger deficits. The 10-year German Bund yield fell 6 basis points to close at 2.82%, the lowest daily close in over a week in a bull flattening move for the German yield curve.
• US Treasury yields were mostly sideways as the front end of the yield curve rose slightly, taking the 2-year benchmark yield to a more than two-week high above 4.05% before easing back, while the 10-year benchmark yield has remained bottled up near 4.30%

Commodities

• Gold hit a new record above USD 3,017 an ounce amid rising Middle East tensions and US economic concerns. Bullion rose after Israel's military strikes on Hamas in Gaza threatened a fragile truce, while Trump has increased pressure on Iran to control the Houthis. For silver to keep up with gold it needs to attract fresh momentum demand above USD 34.10. Also look out for a break in XAUXAG below 87.85.
• Crude rose for a third day as traders scaled back bearish bets related to demand concerns, and instead focused on renewed Middle East tensions that ultimately could see production suffer, especially from Iran as the Trump administration tightens sanctions against Tehran.
• Sugar futures climbed 4% on Monday to the highest in almost three weeks due to scaled-back production estimates in the world’s top growers, Brazil and India. The sweetener has seen wild price swings during the past couple of months, in part caused by wrong-footed speculators.
• HG copper futures in New York nearly touched $5 overnight for the first time since May, supported by China growth initiatives and not least a continued tariff related widening of the premium above London to 50 cents or 11%.

Currencies

• USDJPY and JPY crosses squeezed higher ahead of tonight’s Bank of Japan meeting, which is not seen delivering a rate hike, and with about 12 basis points of policy tightening priced in through the June meeting. USDJPY rose through local resistance above 149.00, trading as high as 149.73 overnight. EURJPY rose above 163.00 for the first time since late January.
• EURNOK dropped sharply yesterday, touching 11.50 briefly for the first time since July of last year after challenging below the range low near 11.52. Recovering oil prices and the prospects for a huge EU and especially German fiscal expansion could be drivers. The next area of interest to the downside is the low from last June at 11.263