Morning wrap (10.03.2025)

Indices on Wall Street ended Friday’s session in the green despite significant losses at the open. The Nasdaq rebounded by 0.7%, the S&P 500 added 0.55%, the DJIA gained 0.52%, and the Russell 2000 closed with a 0.43% gain.

Negative sentiment faded after a speech by Fed Chair Jerome Powell, who emphasized the strength of the U.S. economy, a balanced labor market, and monetary policy positioned to respond to any emerging risks.

Deflation returned to China after a year, stronger than expected. The CPI index in February fell by 0.7% year-over-year (forecast: -0.4%, previous: +0.5%), while producer prices declined by 2.2% (forecast: -2.1%, previous: -2.3%).

Deflationary pressure, concerns about domestic demand, and mixed U.S. data are driving a sell-off in China. The HSCEI is down 2.6%, while the Shanghai SE Composite is trading 0.5% lower. Meanwhile, moderate gains are seen in Japan (Nikkei: +0.35%) and South Korea (Kospi: +0.25%).

The medical sector and real estate-related companies are resisting the sell-off in China. Medical stocks are gaining amid reports that Huawei has established a division dedicated to AI-based diagnostics.

China has announced tariffs on Canadian agricultural and food products worth over $2.6 billion in retaliation for Canada’s levies on Chinese electric vehicles, steel, and aluminum.

Isabel Schnabel of the ECB Governing Council warned that inflation in the Eurozone is likely to remain above target in the coming months. The increased risk of sticky inflation could motivate a decision to pause the rate-cutting cycle in Europe in April, though Schnabel is known as a traditionally hawkish ECB member.

In the FX market, moderate gains are observed among G10 currencies against the dollar, led by the Japanese yen (USDJPY: -0.3%), supported by a record-high Japanese minimum wage reading in January (+3.1% YoY) and a rise in 10-year bond yields to the highest level since 2008 (1.565%). Similar gains are seen in Antipodean currencies (AUDUSD and NZDUSD: +0.25%), while EURUSD adds a modest +0.06%.

Brent and WTI oil prices are correcting after Friday’s rebound, driven by Trump’s threats of potential sanctions on Russia. Brent futures are down 0.5%, while WTI loses 0.55%.

Gold is up 0.1% to $2,910 per ounce, while silver rises to $32.45 per ounce (+0.25%).

A relatively positive sentiment in cryptocurrencies bypasses Bitcoin, which continues to decline, falling to $82,255 (-1%). Meanwhile, Ethereum (+2.6%), Polygon (+4.75%), Dogecoin (+3.25%), and Ripple (+2.1%) are gaining.

In macroeconomic data, today's key releases include industrial production figures from EU countries (Germany, Sweden, Slovakia), the Sentix index, and various inflation readings (Norway).