Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
After a wobbly day start to the week, the markets are looking a little calmer today.
Investors continue to fret about the Covid-19 pandemic, and the possibility that the US central bank scales back its stimulus programme faster than previously expected, should Joe Biden’s multi-trillion dollar stimulus package do the business.
But hopes of an economic recovery as vaccines are rolled out are also supporting markets, although the World Health Authority has cautioned that we don’t get herd immunity this year.
Oil, the traditional bellwether of economic hopes, is rising today after a pullback on Monday. Brent crude has gained almost 1% to $56.12 per barrel, back towards last week’s 10-month highs.
With Goldman Sachs forecasting prices could hit $65 per barrel by this summer, crude prices could keep rising as Saudi Arabia cuts output and the Democrats push through a new stimulus programme.
As Stephen Innes of Axi puts it:
Oil prices are gingerly veering back on the vaccinated, and hyper-stimulus path of least resistance as structural catalysts of vaccine distribution and activity normalization remains intact. Oil is not going to be an asset class that sits still.
Speaking of volatile assets…. bitcoin has rebounded from a juddering selloff yesterday.
After plunging over a fifth to just above $30,000 on Monday, the cryptocurrency has now recovered to around $36,500 today — heading back towards the near-$42,000 record hit on Friday.
Monday’s slump, though, highlighted why regulators are concerned about the crypto market, with Britain’s FCA warning that investors could be wiped out in shady ‘get-rich-quick’ schemes.
Jeffrey Halley, analyst at OANDA, writes that yesterday’s was a ‘harsh lesson’ about the crypto market:
Equities, precious metals and energy all beat a gentle retreat as investors used concerns about Covid-19 and US yields to book some profits and take some risk off the table. Bitcoin fell 20% at one stage overnight, as a harsh lesson in the difference between tradeable versus investible assets was dished out.
I noted that some “institutional investors� called it a correction after its recent galactic speculative rally with some bemusement. It seems that the Emperor’s New Clothes syndrome is alive and well in 2021.
Holger Zschaepitz
(@Schuldensuehner)Global mkts re-risk again as reflation trade continues: Asian equities traded a touch higher w/US & European futures. Dollar reversed early gains w/Euro $1.2166. Bonds tad lower w/US 10y at 1.15%. Gold higher at $1861. #Bitcoin bounces back from y’day’s low at $30.3k, now $35.9K. pic.twitter.com/mDuYOMgtgX
The agenda
- 10am GMT: Bank of England deputy governor Ben Broadbent speech: Covid and the composition of spending
- 3pm GMT: US JOLTS survey of vacancies in November
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