Global Stocks Slide as Market Sentiment Cools, Cryptos Drop
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- Global shares pause their upside move as investors weigh economic outlook
- Cryptocurrencies nosedive with bitcoin losing more than 17% on Tuesday
Stocks in Asia traded mixed while European markets slipped at the opening of Wednesday’s session. The risk-off approach to equities today follows a largely choppy trading behaviour from a day earlier.
European bourses on Tuesday finished broadly in the red as traders offloaded risky bets in the face of rising uncertainty related to Covid-19 and a potential slowdown in economic growth. The pan-continental Stoxx Europe 600 declined 2.32 points, or 0.49%, to finish Tuesday’s action at 472.87.
Stock benchmarks for individual economies in the bloc also tumbled. In France, the CAC40 lost 17.43 points, or 0.26%, to 6,276.07. Germany’s DAX skittered down 89.03 points, or 0.56%, to 15,843.09. London’s FTSE100 erased 37.81 points, or 0.53%, to close at 7,149.37. Spain’s IBEX35 was the only performer in positive territory and closed up 12.20 points, or 0.14%, to 8,894.50.
European Central Bank Policy Update
Investors in European markets are turning their focus on the upcoming European Central Bank event. On Thursday, ECB President Christine Lagarde will announce the central bank’s interest rate decision and would also provide an update regarding the bond-buying program launched as a response to the Covid-19 pandemic more than a year ago.
The market would be looking for clues about tapering, or reducing, the vast monetary support given that the surge in inflation could derail the economic recovery in the euro area.
On the other hand, a stronger-than-expected tapering signal, according to analysts, could strengthen the euro, which could hinder European growth.
Will Covid Fuel More Restrictions?
Stateside, Wall Street stocks wavered on Tuesday after a long weekend. Investors were cautious to place outsized bets on the risky assets due to lingering worries that the Covid-19 threat could fuel another round of restrictions, which could be negative for the US economy.
Equity indexes slid on Tuesday with the Dow Jones Industrial Average losing roughly 270 points. The broader S&P500 stock benchmark declined about 0.3%. The Nasdaq Composite finished the day modestly in the green, up less than 0.1%.
Futures contracts ahead of the regular sessions on Wednesday point to a fairly flat opening.
The Crypto Market Slumps
In cryptocurrency, major digital assets struggle to stage a recovery today after the nascent market got pummeled by a flash crash that erased billions from the market capitalization. Nearly $9,000 was knocked from bitcoin’s price which slid more than 17% on Tuesday.
The leading cryptocurrency dipped near $43,000 hours after it was targeting $53,000 in a solid move higher that had lasted for days. Bitcoin ended its six-day winning streak yesterday. The orange coin is still in a selloff mode as it had declined about 3% on the day to the current market price of $45,400 per coin.
Other crypto assets that are in significant decline include ether, dogecoin, XRP, and more. The Ethereum token briefly dropped about 25% yesterday to levels near $3,000, after hovering above $4,000 earlier on the day. Dogecoin lost around 30%, while XRP lost more than 25%.
El Salvador Goes Crypto
Tuesday marked the day on which El Salvador officially rolled out bitcoin as legal tender. El Salvador citizens will now be able to use bitcoin to pay for anything, along with the US dollar. The government currently holds 550 bitcoins and plans to purchase more.