European stock markets, bitcoin rebound

by Jonathan Adams
bitcoin

Bitcoin rose 12.5% at over $41,000 having nearly dropped through $30,000 on Wednesday

Europe’s stock markets saw a tentative rebound on Thursday and bitcoin rebounded more than 12% after one of its spectacular slides, though tapering talk from the U.S. Federal Reserve kept bond markets under pressure.

After Wednesday’s drama had seen the main cryptocurrencies shed nearly a third of their value at one point and the STOXX 600 suffer one of its worst sell-offs of the year, traders were now watching a recovery unfold.

Bitcoin rose 12.5% at over $41,000 having nearly dropped through $30,000 on Wednesday and been almost at $65,000 just over a month ago. The next biggest cryptocurrency ethereum, which had fared even worse on Wednesday, leapt 15%.

Wall Street was expected to open subdued again but Europe’s stocks regained 0.6% helped by telecoms earnings and talk that Italian microchip heavyweight STMicroelectronics was eyeing up a Norwegian rival.

Commodities also steadied after a 5% overnight tumble in iron ore and coking coal due to China’s cabinet announcing that it would take steps to curb “unreasonable” prices and behaviours that bid up costs.

Referring to drops in the most pumped-up asset classes, investment firm GMO’s head of asset allocation, Ben Inker, said: Right now we are seeing the speculative bubble in the growth stocks seem to be deflating but is this the first innings of a broad deflation of equity markets?

Markets were now walking a tightrope between strong growth and inflation, he added.

Minutes from the last U.S. Federal Reserve meeting published on Wednesday showed “a number” of officials thought that if the recovery holds up, it might be appropriate to begin discussing a plan for adjusting the pace of asset purchases.

The yield on 10-year U.S. Treasuries had gained 4.1 basis points overnight to 1.6830%. They were last back at 1.6557% though Europe’s equivalent benchmark, the 10-year German Bund, were still up at a still negative -0.097%.

On Wall Street overnight the S&P 500 ended 0.3% lower and the Nasdaq was flat, something of a recovery after each shed more than 1.6% during the session. Futures markets were pointed to further modest falls later though.



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