Wall Street Stocks Advance, Bitcoin Rises After China Fears Ease

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Principal Points

• Stocks on Wall Street finished the week and aim to open higher on Monday
• Bitcoin breaks above $44,000 after China introduced another crackdown on crypto last Friday

Wall Street Rises Late Last Week

Stocks on Wall Street advanced broadly on Friday and kept well-bid in futures trading ahead of the regular session today. Investors last week struggled to digest major economic events and expectations amid an increasingly uncertain outlook.

While market participants still keep a close eye on the developments around the Evergrande crisis, last week was especially tumultuous. Sharp Monday selloff roiled the financial market when Chinese real-estate giant Evergrande was unable to meet its deadline for interest payments. Facing default on its debt of over $300bn, the company is still a potential threat to the stability of the global financial market.

Nevertheless, investors in the US jumped at the chance to scoop up discounted shares across the board near the end of last week. After Federal Reserve Chairman Jerome Powell assuaged investors’ fears on Wednesday, stocks rallied. The US central bank said it will likely start tapering, or reducing, the monthly asset purchases in November as it considered the US economy has progressed enough.

Investors Finish the Week on a Positive Note

On that note, traders and investors flocked to a riskier asset such as stocks and propelled a move higher on Thursday and Friday. The broad-based upside swing was substantial enough to flip all three major indexes into the green for the week. The S&P500 and the Dow Jones Industrial Average closed last week with gains of 0.5% and 0.6%, respectively. The tech-heavy Nasdaq Composite remained near unchanged levels.

During last week, US stock funds have seen redemptions of $28.6bn, according to an article in the Financial Times, published Friday. This is the biggest weekly withdrawal since 2018. The sizeable movement of funds out of the stock market coincides with the Fed’s announcement to unwind its monetary support.

Stock Futures Higher on Monday

Still, the late-week rally that reversed earlier losses showed investors are mostly seeking exposure to stocks compared with other assets. On Monday, market participants are looking to extend last week’s gains. Futures contracts on the leading benchmarks kept rising in overnight trading. Dow futures added more than 200 points or over 0.6%. S&P500 futures jumped about half a percent, along with Nasdaq futures, also higher by the same percentage gain.

Bitcoin Gains After China Issues a Ban

In bitcoin markets, the price of the original cryptocurrency peaked above $44,000 today. The move-up came despite a ban from China. The central bank of China announced Friday that it bans all cryptocurrency activity, including owning, investing, trading, or issuing digital currencies. In addition, the People’s Bank of China said no foreign crypto exchanges may operate on the territory of mainland China.

While the ban is severe, it had no lasting effect on the prices of digital assets. Bitcoin slipped about 3% on Friday to a close of $43,000. During the regular session today, the price of bitcoin reached an intraday high of $44,300 per token.

Market Movers Ahead into the Week

Broadly, this week promises to bring increased volatility for investors looking to enter the market. The final week of September marks the end of the third quarter. That could lead to a repositioning of stocks and currencies, resulting in higher fluctuations. You may want to keep an eye on the Evergrande crisis as it will be on the radar this week.

Gold and silver, traditional safe havens, may appreciate if uncertainty over the financial markets persists. And the US dollar and the currency market could swing considerably on Tuesday. Then, Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen discuss the US economic recovery before the US Senate.