Wall Street Kicks Off October on a Strong Note, BTC Above $49K

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Principal Points:

• Wall Street gains to kickstart October, Dow jumps nearly 500 points
• Bitcoin pierced $49,000 per coin late on Sunday as the crypto space rallies in October

What’s Moving in the Markets?

Wall Street stocks pushed higher amid increased hopes for a brightening fourth-quarter outlook. On Friday, the first trading day of the month, the Dow Jones Industrial Average gained 482 points. Prior to that, the 30-stock index closed September with the biggest monthly loss since March 2020 when the pandemic arrived.

That being said, Friday brought gains for the other two major US benchmarks. In detail, the S&P500 gained 1.2%, while the tech-heavy Nasdaq Composite added 0.8%.

Bitcoin, the world’s largest cryptocurrency, rallied 20% in the past four days and broke above the $49,000 milestone. The solid gains were broad-based. On that note, the prices of other major digital currencies also advanced early in October. Ether, the second-biggest token, has surged over 23% since Thursday.

Currency Swings Today

The EURUSD pair drifted higher on Friday and remains steady in the early trading hours on Monday. The volatile pair has recently been pressured by increased US dollar strength. Traders pushed the euro to a 1-year low against the dollar as the rate reached a low of 1.1560 on Friday.

Elsewhere, gold advanced modestly on Thursday and Friday. Investors flocked to the precious metal amid an uncertain outlook for stocks. As a result, the price of gold erased some September losses as it gained about 2.5%. Consequently, gold closed the week at $1,761 per troy ounce.

What’s the Big Picture?

The financial markets are poised for a highly volatile and uncertain fourth quarter. First, the disappointing performance of stocks in September is fueling concerns of a market slowdown. On that note, a decreased risk appetite from traders and investors could translate to a continued pullback in equities.

Second, the US central bank, the Federal Reserve, is thinking about tapering, or reducing, the asset purchase program. In other words, the $120bn cash injections per month will be reversed, leaving less monetary support for the market.

And third, higher inflation in the US and Europe is threatening to hurt consumer spending and large purchases. In addition, it could also dent the valuation of stocks and prompt investors to look for inflation hedges.

What to Watch?

As the week rolls out, trading opportunities will be present in every asset class. From currencies to bitcoin, to individual stocks, traders will have chances to enter the markets.

More precisely, the British pound could experience higher volatility tomorrow with the release of the Composite PMI data.

Additionally, the euro could endure jittery trading on Thursday when the European Central Bank publishes its Account of Monetary Policy Meeting.

The US dollar and gold are bound for a wild session on Friday when the US Labor Department will reveal fresh jobs data. Namely, the non-farm payrolls report and unemployment data for September will be announced Friday at 08:30 am EST.

Looking Ahead into the Day (EST times)

Australia will be in the spotlight today in terms of scheduled economic events. The Reserve Bank of Australia will reveal its interest rate decision at 11:30 pm. Along with it, the central bank will also publish the Rate statement. Elevated volatility could be expected in the Australian dollar.