News
Stocks Fall, Dollar Holds Firm as Fed Steps Up; crypto is soaring
By Kevin Buckland
TOKYO (Reuters) – Asian stocks drifted lower while the dollar remained firm on Tuesday as investors awaited minutes from the Federal Reserve’s latest policy meeting to assess the timing and size of possible cuts interest rates this year.
Gold retreated from Monday’s all-time high, while crude oil fell on concerns that U.S. interest rates would remain high for longer, with Fed officials remaining cautious about a recent slowdown in the ‘inflation.
Cryptocurrencies ether and bitcoin have hit new six-week highs amid speculation that the U.S. Securities and Exchange Commission (SEC) may approve an ether spot exchange-traded fund (ETF).
Markets are currently pricing in about 41 basis points of Fed rate cuts this year, with a quarter-point cut fully priced in for November.
Traders rushed to replenish their bets on easing after data from earlier this month showed consumer price pressures had eased in April, following a three-month run of upside surprises at the beginning of the year.
Even so, Fed officials are reluctant to declare that inflation is under control, with Vice President Philip Jefferson saying Monday that it was too early to say whether the slowdown is “sustainable,” and Vice President Michael Barr saying a restrictive policy needs more time. .
Minutes from the Fed’s latest meeting scheduled for Wednesday could provide valuable insight into future policy direction, although the deliberations predate last week’s weaker CPI reading.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.9%, weighed down by the Hang Seng’s 1.9% decline from Monday’s multi-month high.
Japan’s tech-heavy Nikkei index tracked the Nasdaq’s overnight gains to a record high, before reversing course to trade 0.1% lower.
Nasdaq futures edged down 0.06%. S&P 500 futures were flat after Monday’s 0.1% gain.
“Market sentiment remains relatively strong, with low implied volatility, supported by greater confidence in U.S. rate cuts this year,” Kyle Rodda, senior markets analyst at Capital.com, wrote in a note.
At the same time, record levels of metals such as gold and copper “are being presented as a signal that economic activity is improving globally, and this could be a factor in maintaining inflation ” Rodda said.
Gold fell 0.3% to around $2,417 an ounce, after hitting the $2,450 threshold for the first time overnight.
The greenback held firm against its main rivals, with the dollar index flat at 104.62 after rebounding from a five-week low of 104.07 hit on Thursday.
The 10-year Treasury yield was little changed at 4.4433%, after rising 1.7 basis points on Monday.
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Brent crude futures fell 0.7% to $83.17 a barrel and U.S. West Texas Intermediate (WTI) crude fell 0.7% to $79.22.
Meanwhile, Monday’s standout performers hit new highs as traders snapped up cryptocurrencies following a report that the SEC had abruptly asked exchanges that want to trade ETFs to ether to update their regulatory documents, increasing bets that approval could come this week.
Bitcoin climbed as high as $71,957 and ether surged to $3,720.80, both reaching levels not seen since April 9.
“Speculation around the ether ETF has certainly played its part in this development, throwing fuel on the bonfire of the crypto bull market that reignited after the colder US CPI data from last week,” said IG analyst Tony Sycamore.
Sycamore expects Bitcoin to retest the all-time high of $73,803.25 in the coming days before attempting to reach $80,000.
(Reporting by Kevin Buckland; Editing by Subhranshu Sahu)