Shares wary on U.S. inflation, battered bitcoin charts recovery

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Stocks battled for momentum on Monday as investors waited for key U.S. inflation readings for guidance on monetary policy as Bitcoin rebounded on news of China’s curbing of mining and cryptocurrency trading.

European stocks (.STOXX) were 0.1% firmer after receiving Friday’s data showing accelerated business growth in the UK and Eurozone for April. The same day ECB President Christine Lagarde’s assertion that it was too early for the bank to discuss the winding up of its 1.85 trillion euro stimulus plan had also provided support. Continue reading

Markets in Austria, Denmark, Hungary, Norway, Switzerland and Germany were closed for holidays.

“The euro zone and the UK are starting to boom as their economies reopen,” Bank of Singapore chief economist Mansoor Mohi-uddin said in a note.

“Falling hospital stays, falling deaths, faster vaccinations and easing of lockdowns are all helping to rapidly recover confidence across Europe.”

The MSCI World Equity Index (.MIWD00000PUS) was 0.1% firmer.

MSCI’s broadest index for stocks in Asia Pacific outside of Japan (.MIAPJ0000PUS) fell 0.2% in slow trade. The Japanese Nikkei (.N225) gained 0.2% and the Chinese blue chip (.CSI300) rose 0.4%.

The Nasdaq futures rose 0.4% and the S&P 500 futures rose 0.5%.

Government bonds denominated in dollars by Belarus gave up as much as 2 cents after Belarusian authorities forced an airliner to land on Sunday and arrested an opposition journalist on board who was convicted by Europe and the United States. Continue reading

After the strong growth Friday polls showed in global service sectors, all eyes will be on US personal consumption and inflation numbers this week.

A high core inflation rate would sound alarm bells and could revive talk of an early rejuvenation by the US Federal Reserve.

The diary has a ton of Fed speakers this week, including influential Fed board governor Lael Brainard, and markets will be excited to see if they stick to the script of being patient with politics.

BofA’s monthly fund manager survey found that 69% of respondents worldwide expect above-trend economic growth and inflation.

As a result, managers had moved into commodities and late cyclicals, where overweight positions were near 15-year highs while Bitcoin was the busiest trade.

A man is reflected on a stock exchange exchange on February 26, 2021 in Tokyo, Japan. REUTERS / Kim Kyung-Hoon

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“Given these optimistic outlooks on growth and inflation, investors run the risk of growth slowing and inflation proving temporary,” BofA analysts said in a note.

“Plus, tech that has been viewed as overcrowded lately is back underweight and would likely benefit if inflation fears subside.”

GOLD IN FAVORITE

After losing 13% on Sunday, Bitcoin rose 6% to $ 36,735 on Monday, but was still more than 40% below its all-time high.

This has been hampered in part by China’s crackdown on the mining and trading of the largest cryptocurrency as part of ongoing efforts to prevent speculative and financial risk. Continue reading

Major currencies remained stable by comparison, with the euro holding at $ 1.2197 after repeatedly failing to clear chart resistance at $ 1.2244 last week.

The dollar was idle against the yen at 108.74, floating between the support at 108.56 and the resistance at 109.33. Against a basket of currencies, the dollar had stabilized at 89.920 after hitting its lowest level since January at 89.646 on Friday.

In bond markets, Lagarde’s reluctant comments on Friday kept borrowing costs below recent multi-month highs.

Germany’s reference yield for 10-year bonds was slightly lower at -0.13%, around six basis points below the two-year high reached last week.

The weakness of the dollar, coupled with concerns about inflation and the wild volatility of cryptocurrencies, to bring gold back to the fore. The metal was last at $ 1,881 an ounce after hitting its highest since January.

“The recent mix of a strong US consumer price index, weak employment and Fed policymakers poised to exceed inflation while targeting the employment gap could stay bullish for a while,” said Michael Hsueh, commodities strategist Foreign exchange at Deutsche Bank.

“The rebound in gold was tied to the strong rebound in some parts of the commodity complex, increasingly represented this year by the agriculture, metals and transport indices, and an eight-year high in US 10-year inflation expectations.”

Oil prices soared as a storm formed in the Gulf of Mexico and Iran that said a three-month nuclear surveillance deal had expired, raising doubts about the future of indirect talks that could end US sanctions on Iranian crude oil exports.

Brent recently rose 1.5% to $ 67.46 a barrel, while US crude rose 1.5% to $ 64.54 a barrel.

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