Europe stocks attempt recovery, bitcoin stabilises

21 May, 2021 - 00:05 0 Views
Europe stocks attempt recovery, bitcoin stabilises

eBusiness Weekly

European stock markets recovered somewhat Thursday from the previous day’s slump, with investors comforted by the brighter outlook and easing coronavirus concerns, analysts said.

London stocks edged up by 0,2 percent at midday in the British capital. 

Frankfurt stocks added 0,5 percent and Paris won 0.6 percent in early afternoon eurozone trade, despite a mixed session in Asia, as dealers mulled reportedly upbeat remarks from the head of the European Central Bank.

Bitcoin stabilised after Wednesday’s wild gyrations that saw the world’s most popular cryptocurrency lose almost a third of its value in one day before recovering most of the losses.

Oil however fell further after US data showed a jump in stockpiles, indicating weaker demand in the world’s top crude consumer.

“The more upbeat tone in Europe comes as authorities across the region are easing pandemic restrictions due to a falling number of Covid cases and rising vaccine rates,” said OANDA analyst Sophie Griffiths.

“ECB Governor Christine Lagarde noted the improving Covid picture in Europe while insisting that monetary and fiscal support should not be withdrawn too soon.”

Europe’s bourses tanked Wednesday on fears that central banks will wind down easy money policies to tame high inflation.

Thursday’s gains were still capped after minutes showed some US Federal Reserve officials contemplating a cut in its vast monetary easing measures.

Nevertheless, global equities have soared after hitting their pandemic nadir in March last year, thanks to central bank largesse and mind-boggling government spending measures, with recent gains also helped by the rollout of vaccines and easing of lockdown measures.

But investors have for months grown increasingly concerned that the blockbuster bounceback expected in the world economy will fan inflation as the stimulus mixes with cashed-up consumers who have been unable to spend finally being let loose.

And data suggests those fears are valid as recent inflation readings in several countries beat forecasts, with supply shortages and a low base effect from last year compounded by companies hiking wages to attract workers.

The Fed has repeatedly insisted that it sees upward pressures as transitory and that prices will stabilise next year, adding that it will maintain its ultra-easy policies and record low interest rates until unemployment has been tamed and inflation is running consistently hot.

However, with the economy well on the recovery track, minutes from the Fed’s April meeting released Wednesday indicated some board members consider the time might soon come to at least begin discussing the bank’s position.

US markets ended in the red but well off their earlier lows as investors took comfort that any change in Fed policy would not likely be immediate.

Bitcoin edged up Thursday to sit just below $40,000, having endured a rollercoaster Wednesday after China signalled a new crackdown on the cryptocurrency before Elon Musk gave crucial support on Twitter.

The digital unit was sent crashing from $45,000 to almost $30,000 at one point – less than half its record high reached last month – in reaction to Beijing’s warning that it would not be allowed for transactions. 

But Tesla tycoon Musk later tweeted a diamond and open hands emoji many took as a sign his car giant would not sell. – AFP.

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