Markets Mixed, Bitcoin Recovers

Market Catch Up

• Asian bourse traded mostly up today, as expectations that monetary policy will remain accommodative across the world and hopes that Covid-19 vaccine rollouts will continue and thus ease fears of another wave of infections.

• Gains were led by Chinese markets, with the CSI300 moving 2.35% higher, while the Hang Seng was 0.3% higher. On the other hand, the Nikkei covered its losses and ended up 0.01% higher, the same with KOSPI. On the other hand, the ASX started off positively but moved to trade in losses by the end of the session.

• Overall, the MSCI Asia-Pacific (ex. Japan) is up 5% so far this year, on track for its third straight yearly gain. As analysts note, monetary and fiscal policy continue to support riskier assets, even though to a lesser extent than the previous year.

• The US500 stock futures were down 0.22%, while DAX futures lost 0.28%. On Friday, the S&P 500 gained 0.4% to close at a new record high, registering its sixth straight weekly gain. The Dow finished 0.5% higher also at a record high while the Nasdaq climbed 0.1%.

• Stock market investors will keep their focus on the earnings releases with IBM and Coca-Cola set to release them today. Netflix will report its earnings on Tuesday while later in the week American Airlines and Southwest will be the first major post-Covid cyclicals to post results.

• The European Central Bank is scheduled to meet on Thursday with no changes to rates or guidance expected while preliminary data on factory activity around the globe for April is due on Friday.

Taiwan's central bank may again revise this year's growth forecast higher given the island's strong economic prospects, but will also keep an eye on whether the economy could overheat.

• In company news, Toyota Motor Corp announced that it will introduce 15 battery electric vehicle models globally by 2025, expanding the automaker's electric vehicle lineup to achieve carbon neutrality before 2050. The company also said that t plans to launch more than 20 new energy vehicles in China by 2025.

Currencies and Commodities

In currencies, the US Dollar was around a four-week low against a basket of currencies as investors increasingly trust the Federal Reserve’s insistence that it would keep an accommodative policy stance for, as it appears, at least 2021.

The Dollar index was unchanged at 91.612, not far from its Friday low. More specifically, the USD was slightly down against the Japanese yen, at 108.72, while the Euro slightly lower at $1.1966 while the British pound eased 0.07% to $1.3820. At the same time, the Aussie dollar slipped for a second straight day to $0.7715.

In commodity markets, oil prices were down with Brent crude down 23 cents, or 0.3%, at $66.54 a barrel, after rising 6% last week. US oil (WTI) was down 27 cents, or 0.2%, at $62.96 a barrel, having gained 6.4% last week.

The progress of vaccination in developed markets can be seen in road traffic levels, but surging case numbers have reversed the recovery in the emerging countries such as India and Brazil.

In the United States, energy companies added oil and natural gas rigs for a fifth consecutive week for the first time since February as higher oil prices this year encouraged them to start drilling again.

Gold was up 0.2% at $1,779.3 per ounce, following a reverse course with respect to the Dollar.

Elsewhere, Bitcoin, the world’s biggest cryptocurrency, recouped most of its losses after plunging as much as 14% on Sunday following speculation that the US Treasury may be looking at cracking down on money-laundering activity within digital assets. Furthermore, sata website CoinMarketCap cited a blackout in China’s Xinjiang region, which reportedly powers a lot of bitcoin mining, for the selloff.

The retreat in Bitcoin also comes after Turkey’s central bank banned the use of cryptocurrencies for purchases on Friday. Bitcoin is up more than 90% year to date, driven by its mainstream acceptance as an investment and a means of payment, accompanied by the rush of retail cash into stocks, exchange-traded funds and other risky assets.

The Look-Out

• This week is off to a quiet start with no major data releases slated on Monday.