Stock markets struggled for traction on Thursday after a jittery session on Wall Street where cryptocurrencies crashed and a hint of tapering talk from the U.S. Federal Reserve drove selling in the bond market and lifted the safe-haven dollar.
Benchmarks in South Korea (.KS11) and Japan (.N225) were either side of flat in morning trade and Hong Kong’s Hang Seng (.HSI) fell about 0.8% to pull MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) down by 0.2%.
Bitcoin , which plunged as much as 30% to $30,000 overnight, was struggling for support around $36,000. U.S. stock futures , wobbled just below flat.
Commodities also fell, Treasuries nursed losses while the dollar held overnight gains.
Fed minutes published on Wednesday said “a number” of officials thought that if the recovery holds up, it might be appropriate to “begin discussing a plan for adjusting the pace of asset purchases”. read more
“This is very much the market view, really,” ING economist Rob Carnell said on the phone from Singapore, with traders expecting strong hints over summer that the taper is coming and that policy support could start to ease in December.
“This is taking us to where we think we’re going to go, and perhaps this removes a little bit of uncertainty around that – so you get a slight increase in bond yields and the dollar rallying a little bit.”
The yield on benchmark 10-year U.S. Treasuries rose 4.1 basis points overnight to 1.6830% and dipped to 1.6676% early in Tokyo trade. The dollar scraped itself off a four-month low to hover around $1.2183 per euro .
The dollar also rose through its 20-day moving average against the yen, Aussie and kiwi. It last bought 109.17 yen and the dollar index was last at 90.149.
On Wall Street overnight the S&P 500 (.SPX) closed 0.3% lower and the Nasdaq (.IXIC) was flat, something of a recovery after each dropped more than 1.6% during the session.
The trigger for sharp falls in bitcoin, ether and other cryptocurrencies appeared to be China’s move on Tuesday to reinforce strict curbs on crypto trading by barring financial institutions from providing transaction services. read more
Traders said the huge run-up in prices for the asset class in recent months meant that gravity also probably played a role, as well as Tesla boss Elon Musk’s apparent cooling on bitcoin over the amount of energy consumed in processing transactions. read more
Outages at several major trading platforms during the maelstrom, which also set ether tumbling nearly 50%, also did little to inspire confidence. Although well above overnight lows, ether and bitcoin remained under pressure on Thursday.
“It’s not just crypto – although that is the poster child of this movement – but SPACs, recent IPOs, ARK Innovation and Tesla, to name a few, have…