Breakfast Bites - Optimistic Monday

US Equity Futures higher, Vix falling below 20; Some optimism on Tariffs; PMIs in Focus

Mar 24, 2025

Rise and shine everyone.

Happy Monday!

US Futures are pointing higher to kick off the week, with Nasdaq 100 futures up more than 1.2% and a clear risk-on mood across U.S. equities. The VIX has dipped below 20, adding to the optimism. All of the Mag 7 are in the green, led by Tesla up 3.8%, Meta up 2.1%, and Amazon rising 1.5%. Bond yields are edging up 2–4 basis points, while commodities are broadly weaker—aluminum is down 1.4%, copper off 0.8%.

The focus this week is on macro data. We’ve got flash PMIs out today and PCE coming up on Friday. Markets are also bracing for a major tariff announcement next Wednesday (April 2), but fears have cooled a bit after a Bloomberg report suggested Trump’s tariff package could be more targeted than originally expected.

In Europe, the FTSE 100 is holding gains, supported by the softer U.S. tariff rhetoric and expectations of policy tweaks from UK officials ahead of Chancellor Reeves’s Spring Statement on Wednesday.

Germany’s DAX is bouncing back after Friday’s losses, with gains led by energy and financials. That said, sentiment is still cautious amid mixed domestic data and ongoing trade concerns. German Bunds are hovering near key yield levels, caught in a tug-of-war between growth hopes and rate uncertainty. We did talk about bond yields gradually reverting lower once it was clear that the fiscal package would take time to implement.

Asia had a mixed session. India’s Nifty 50 led with a 1.3% gain, while the broader region saw mostly flat action. The Kospi underperformed, slipping 0.3%, as volatility followed the Constitutional Court’s decision to reinstate PM Han as acting President. In Japan, the Finance Minister and BOJ Deputy Governor voiced concern about FX volatility, with USD/JPY approaching the 150 mark again. Governor Ueda struck a calmer tone, noting that currency stability hinges on sound monetary policy.

Meanwhile, Indonesian equities continued their sharp slide—falling nearly 4% and dropping below 6,000 for the first time since 2021.

Gold is inching closer to record highs, riding on a softer dollar and continued central bank demand, especially from China. Bitcoin is also gaining as risk sentiment picks up and fears over aggressive tariffs fade.

On the corporate side, Tesla is leading early movers with a strong 3.8% rally. Century Aluminum made headlines after announcing plans to build the first new U.S. aluminum smelter in 45 years, citing the expected tariff package as a catalyst. Toyota is reportedly delaying its Fukuoka battery plant project due to slowing EV demand. And in Washington, the U.S. is opening a national security investigation into Chinese telecom companies—ZTE, Huawei, and China Telecom—amid suspicions they may be bypassing FCC restrictions by operating through private or unregulated channels.

Brief PMI updates

Australia: Manufacturing PMI jumped to 52.6, the highest since 2022, signaling a strong return to expansion and momentum in factory output.
Japan: PMIs disappointed across the board as manufacturing contracted for a ninth straight month, services fell into contraction for the first time in five months, and the composite hit a three-year low, pointing to broad-based economic weakness.
France: Manufacturing PMI rose to 48.9, beating forecasts and reaching a 25-month high, suggesting that the contraction is easing meaningfully.
Germany: Manufacturing PMI improved to 48.3, indicating a slower pace of contraction as new orders picked up and job cuts slowed. The composite reading was the strongest in ten months, despite some loss of momentum in services.
Eurozone: Composite PMI edged up to 50.4, the fastest growth in seven months, but missed expectations, showing mixed signals and patchy recovery across the bloc.
United Kingdom: Manufacturing PMI fell to 44.6, the lowest since late 2023, with sharp declines in output and sentiment, while services PMI rose to 53.2, the strongest since August 2024, driven by improving domestic and overseas demand.