Daily Market Outlook - Monday, March 17

By Patrick Munnelly of Tickmill

Monday, March 17, 2025 7:15 AM EDT

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Asian markets rallied as reports revealed Chinese consumer spending grew faster than expected at the start of the year. In contrast, US stock futures dipped after Treasury Secretary Bessent described the recent market downturn as a "healthy correction." Markets in Australia, Japan, and South Korea also recorded gains. A major index of Chinese stocks listed in Hong Kong rose by as much as 1.3%, while the CSI 300 Index, a key benchmark for China's mainland markets, showed volatility amid concerns over a potential deepening of the property sector crisis in the world's second-largest economy. Oil prices climbed for the second straight day, fuelled by expectations of rising demand from China, the world's largest oil importer. The US Dollar remained stable, while gold prices held their ground after slipping on Friday, marking their first decline in four days due to shifting risk sentiment. With mixed signals emerging from China's latest economic data, investor focus is shifting to a critical briefing scheduled for Monday afternoon. Officials are expected to unveil measures aimed at stabilising stock and real estate markets, increasing wages, and encouraging higher birth rates. Reviving consumer spending remains central to Beijing's strategy to counteract US trade restrictions that have disrupted global trade flows and reduced Chinese exports.

During the weekend, the U.S. Secretary of Defence stated that the country would persist in its strikes against Yemen's Houthis until they ceased their assaults on shipping. This announcement caused a sharp rise in oil prices during early trading in Asia on Monday, as investors grew concerned about potential supply disruptions. Brent and U.S. crude futures climbed over 1% in the morning session, before trimming some of their gains with the likelihood of an approaching resolution to the Ukraine conflict, which might allow more Russian energy supplies to return to Western markets. U.S. President Donald Trump indicated that he intends to communicate with Russian President Vladimir Putin on Tuesday to discuss the conclusion of the war in Ukraine, following positive discussions between U.S. and Russian officials in Moscow.

This week will be marked by significant central bank meetings, including the Fed, SNB, and BoJ on Wednesday, followed by the BoE's rate decision on Thursday. However, it appears that little will change, with rates expected to remain unchanged across these banks, except for the SNB, which is more likely to implement a rate cut. The Fed will release new economic projections; however, it remains unclear if many of the 'placeholder assumptions' about government policies used in previous estimations, prior to Trump's administration, can now be confidently updated with more concrete data. Additionally, pay attention to any indications regarding the potential pause or slowdown of quantitative tightening, especially after it was mentioned in the January minutes. As for the BoE, the minutes are likely to reiterate a 'gradual and careful' strategy. The Monetary Policy Committee (MPC) will have preliminary insights from the labour market report released on Thursday, where we will be looking for signs of slack, particularly regarding underemployment instead of just unemployment (refer to the chart). Another point of interest in the UK will be the February public finances data released on Friday, which could influence the risk outlook for the remit to be announced on March 26 for 2025-26. In the eurozone, there will be several ECB speakers on Wednesday along with the final February CPI, and beyond that, there will be other important data releases covering Chinese economic activity, inflation in Japan and Canada, and employment figures in Australia.

Overnight Newswire Updates of Note

Volkswagen, Renault Draw Closer To China On EVs Despite EU Tariffs
French Macron To EU Colleagues: Stop Buying American, Buy European
China Economic Data Shows Surprising Signs Of Strength
China Maps Out Plan To Raise Incomes, Boost Consumption
South Korea’s Chip Exports To China Sink As US Controls Tighten
Canada Flexes Economic Muscle As Tariff Negotiations Continue
Trump: Will Impose Both Reciprocal And Sectoral Tariffs
Trump To Speak With Putin Tuesday In Push For Ukraine Ceasefire
US Consumers Think Inflation Will Shoot Up In The Year Ahead
Trsy Sec Bessent: White House Is Heading Off A Financial Crisis
NZ Services Sector Slips Back Into Contraction In Feb
NZ Economists Lower 2025-26 GDP Growth Forecast To 2.1%
Oil Rises Amid Geopolitical Concerns
Goldman Cuts Oil Forecasts On Slow US Growth, OPEC+ Policy

(Sourced from reliable financial news outlets)

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)

EUR/USD: 1.0820-30 (1.1BLN), 1.0840-50 (1BLN), 1.0860-70 (909M)
1.0890-1.0900 (1BLN), 1.0905-10 (390M), 1.0940 (451M), 1.1000 (586M)
USD/CHF: 0.8935 (200M). EUR/GBP: 0.8435 (880M), 0.8500 (781M)
GBP/USD: 1.2745 (508M), 1.2800 (316M)
AUD/USD: 0.6345-50 (633M)
USD/CAD: 1.4275 (560M), 1.4300 (407M), 1.4420-25 (298M), 1.4500 (254M)
USD/JPY: 148.45-50 (572M), 149.00 (1.1BLN). EUR/JPY: 161.55 (597M)

CFTC Data As Of 14/3/25

Speculators have significantly adjusted their positions across various financial instruments. In CBOT US Treasury Bonds futures, net short positions rose by 16,407 contracts to a total of 34,204. Similarly, CBOT US Ultrabond Treasury futures saw an increase of 19,490 contracts in net short positions, reaching 251,394. The net short position for CBOT US 2-year Treasury futures surged by 50,916 contracts to 1,222,215, while CBOT US 5-year Treasury futures experienced a significant rise of 75,006 contracts, bringing the total to 1,873,367. For CBOT US 10-year Treasury futures, the net short position increased by 25,035 contracts, now standing at 737,075.
On the equity side, speculators reduced their S&P 500 CME net short position by 87,266 contracts, bringing it down to 204,619. Concurrently, equity fund managers trimmed their S&P 500 CME net long position by 59,714 contracts, lowering the total to 841,841.
In the currency markets, the Japanese yen holds a net long position of 133,902 contracts, while the euro has a net long position of 13,090 contracts. The British pound reflects a net long position of 29,193 contracts, whereas the Swiss franc shows a net short position of -36,957. Meanwhile, Bitcoin maintains a net long position of 1,529 contracts..