NEW YORK – Stock markets, oil prices and bitcoin sank yesterday, as a raft of issues ranging from rising inflation to China’s cryptocurrency crackdown spooked investors.
Wall Street had opened sharply lower, joining markets in Asia and Europe that fell on fears central banks will wind down easy money policies to tame inflation.
But United States markets rallied somewhat, finishing only modestly down after Federal Reserve meeting minutes showed the US central bank inching closer to shifting monetary policy, but not in any hurry to do so.
Oil prices were also under pressure after US data showed a jump in stockpiles and virus-hit Asia experiences a weak pick-up in demand.
Bitcoin, meanwhile, shed a whopping 30% after China signalled a new crackdown on the cryptocurrency and tycoon Elon Musk sent mixed signals about his car company’s use of the unit.
Bitcoin fell to almost US$30,000 (RM124,125) – less than half the record level it reached last month – before recovering a bit to around US$39,587.
China said digital currencies could not be used in markets as they are not real, adding that firms are not allowed to use the units to price their goods or services.
“This is the latest chapter of China tightening the noose around crypto,” said Antoni Trenchev, managing partner and co-founder of London-based crypto lender Nexo.
Bitcoin later recovered somewhat after an ambiguous Musk tweet with diamond and open hands emoji that some observers interpreted as meaning Tesla will not be selling bitcoin.
Musk had previously expressed concerns about the energy-intensive process in mining bitcoin.
Meanwhile, London equities shed 1.2% as trading ended, after official data showed a spike in United Kingdom inflation last month.
Frankfurt dived by 1.8% and Paris lost 1.4%.
US stocks also appeared heading for an ugly session, but recovered somewhat. The Dow Jones Industrial Average ended down 0.5% at 33,896.04, more than 400 points above session lows.
Fed minutes showed some officials believe the US economy may soon be healthy enough to taper asset purchases, one of the first signs of a shift in the central bank’s easy money policies.
“Thinking about tapering,” said a note from Oxford Economics that describes the Fed’s deliberate moves toward a shift. The firm predicted that the Fed will formally change course in August.
But the Fed minutes were enough to boost the dollar against other major currencies. – AFP, May 20, 2021
