Daily Market Outlook - Thursday, March 13

By Patrick Munnelly of Tickmill

Thursday, March 13, 2025 7:15 AM EDT

Cutout paper illustration representing scheme and Stocks inscription

Image Source: Pexels

Stocks in Asia tumbled on Thursday, erasing earlier gains, as concerns over the economic fallout of President Donald Trump’s trade policies overshadowed the initial optimism sparked by a tepid U.S. inflation report. Gold climbed to within $10 of its all-time high, the safe-haven yen strengthened, and U.S. Treasury yields declined. Crude oil prices also retreated. Hong Kong’s Hang Seng Index dropped more than 1%, while mainland Chinese blue-chip stocks declined over 0.5%. Japan’s Nikkei Index, which had risen as much as 1.4% earlier, ended the session flat. In the U.S., struggling technology stocks led a recovery on Wall Street on Wednesday after data showed consumer prices rose at their slowest pace since October. The inflation figures were closely watched following a series of weaker economic indicators but failed to account for the effects of Trump’s tariff policies. This inability of the market to sustain a rally signals a warning for dip buyers. Trump’s tariffs on all U.S. steel and aluminium imports took effect Wednesday, intensifying efforts to reshape global trade in favour of the U.S., while drawing swift backlash from Canada and Europe. It remains unclear whether Trump will adopt a similar bait-and-switch approach with Europe, similar to that used with Canada and Mexico, or continue the double-down strategy seen with China. On a brighter note, Germany’s Kiel Institute reported that only a "small fraction" of EU-targeted goods are exported to the U.S. Meanwhile, Britain has maintained a low profile, refraining from immediate tariff responses but keeping its options open. This may explain sterling’s steady rise, contrasting with the euro’s decline, though the latter had previously experienced sharper gains. Domestically, Trump’s economic policies have been criticised for their unpredictability, with many Americans fearing higher prices as a result. Corporate leaders are also voicing concerns. Delta Airlines and retail giant Walmart have warned that heightened economic uncertainty could hurt their earnings. While some hope the trade conflict might ease through domestic policy adjustments rather than retaliatory tariffs from key trading partners, the S&P 500’s more than 10% drop in just three weeks has yet to prompt a reassessment of U.S. trade strategies.

In the UK, January CPI inflation rose to 3.0% year-on-year, up from 2.5% in December, exceeding market and BoE expectations by 0.2 percentage points. Services inflation increased to 5.0% year-on-year from 4.4%, but fell short of forecasts by 0.2 points. Core inflation aligned with expectations, rising to 3.7%. The transport sector drove the overall increase due to recovering airfares, while food prices, rising 3.1% versus the BoE's forecast of 2.4%, were a key contributor. The ONS found broad-based food price increases rather than anomalies. Despite CPI reaching 3% earlier than the BoE anticipated, mixed signals from recent labour and inflation data cast doubt on the Monetary Policy Committee’s plan to reduce rates in March.

Stateside February core CPI rose 0.23% month-over-month, below expectations, with the year-on-year rate declining to 3.12%. Airfares and car insurance shifted from an 8bp boost last month to a 4bp drag, though these are not inputs for the PCE index. Rent and owners’ equivalent rent (OER) slowed to 0.28%. Based on CPI details, analysts at Goldman Sachs estimate core PCE rose 0.29% in February (vs. 0.25% expected), with a year-over-year rate of 2.70%. Headline PCE likely increased 0.27% month-over-month and 2.46% year-over-year, while market-based core PCE rose 0.30%.

Overnight Newswire Updates of Note

UK PM Kier Starmer Sees £45B Savings In UK Push Into Digital, AI
Germany’s Stagnant Economy Dents Funds In Consumer Start-Ups
Germany Readies To Finally Lead Europe, If Merz Can Pull It Off
French Central Bank Trims Growth Outlook On Trade Tensions
JP Morgan Economist Sees 40% Chance Of A US Recession In 2025
Trump Threatens More Tariffs; EU, Canada Retaliate For Those In Place
Fed Ends Bank Term Funding As Scheduled, Citing Liquidity Stability
Trump Taps Michelle Bowman As Fed Vice-Chair For Supervision
Trump’s Erratic Policy Harming Reputation Of American Assets
Russia Lays Out Demands For Talks With US On Ukraine, Sources Say
Global Investors Make A Risky Bet On Russia’s Return To Markets
Taiwan Warns Of Currency Risks From Stock Outflows, Trump Policy
Apple's Struggles In China Extend To Earphones And Tablets
Adobe Gives Tepid Revenue Outlook With Focus On AI Tools

(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: 1.0800 (1.9BLN), 1.0820-30 (890M), 1.0850-60 (2.3BLN)
1.0900 (685M), 1.0920-30 (952M), 1.0955 (1.2BLN), 1.1000 (966M)
USD/CHF: 0.8745 (300M), 0.8820 (530M), 0.8860 (300M)
EUR/GBP: 0.8450 (402M). AUD/NZD: 1.1100 (493M)
AUD/USD: 0.6260 (360M), 0.6300 (314M), 0.6340-45 (497M), 0.6360 (403M)
USD/CAD: 1.4350 (380M), 1.4365 (627M), 1.4400 (784M)
USD/JPY: 147.00 (290M), 147.65-70 (516M), 148.00 (1.4BLN), 148.50-55 (395M)
EUR/JPY: 159.50 (450M), 159.75 (420M), 160.00 (308M), 160.80 (209M)

CFTC Data As Of 7/3/25

CFTC positions for the week concluding on March 4th
The net long position in Japanese yen stands at 133,651 contracts.
The net short position in euros stands at -10,106 contracts.
The net long position in Bitcoin stands at 614 contracts.
The Swiss franc records a net short position of 37,775 contracts.
The net long position for the British pound stands at 18,574 contracts.
Equity fund speculators reduced the S&P 500 CME net short position by 48,053 contracts, bringing the total to 291,884.
Speculators raise activity at CBOT. The net short position in US Ultrabond Treasury futures decreased by 4,169 contracts, totalling 231,904. Equity Fund Managers reduced their net long position in the S&P 500 CME by 10,497 contracts, bringing it to 901,555. Speculators have shifted positions on CBOT. US Treasury bond futures reflect a net short position of 17,797 contracts, a decrease from 40,912 net longs recorded the previous week.
Speculators raised the net short position in CBOT US 2-Year Treasury futures by 21,846 contracts, bringing the total to 1,171,299.
Speculators raised their net short position in CBOT US 10-Year Treasury futures by 12,185 contracts, totalling 712,040. Additionally, they increased their net short position in CBOT US 5-Year Treasury futures by 172,588 contracts, reaching 1,798,361.