Global markets at record highs; bitcoin hits $50,000 – as it happened

Graeme Wearden

from Economics | The Guardian on 2021-02-16 19:01 (#5E7QW)

Rolling coverage of the latest economic and financial news

Earlier;

7.00pm GMT

Right, time for a recap.

Bitcoin has hit a fresh record high, scaling $50,000 for the first time and reigniting the debate over the cryptocurrency's value, and future.

6.16pm GMT

Back to bitcoin... and a senior US central banker has insisted that the cryptocurrency doesn't present a serious threat to the US dollar's position.

St. Louis Federal Reserve President James Bullard told CNBC that the dollar's status as the world's reserve currency was safe:

I just think for Fed policy, it's going to be a dollar economy as far as the eye can see - a dollar global economy really as far as the eye can see - and whether the gold price goes up or down, or the bitcoin price goes up or down, doesn't really affect that.

You don't want to go to a non-uniform currency where you're walking into Starbucks and maybe you'll pay with Ethereum, maybe you'll pay with Ripple, maybe you'll pay with bitcoin, maybe you'll pay with a dollar. That isn't how we do this. We have a uniform currency that came in at the Civil War time."

Bitcoin poses no threat to the dollar as the world's currency leader, Fed's Bullard says https://t.co/vc0gwcXYd4

5.40pm GMT

It's also been an exciting day for Italian government bonds.

Rome sold debt at near record-low interest rates today, as investors flocked to the first bond auction since former European Central Bank chief Mario Draghi became prime minister.

Rome is set to raise a total of 14bn ($17bn) from the sale of a 10-year nominal bond and a 30-year inflation-linked note, one of the banks managing the issue said, adding demand had totalled more than 82bn.

The final size of the order book is well below the record 134bn in demand the two bonds had initially attracted, with many investors dropping out after Italy cut the return on the issues.

Draghi sells! #Italy attracted >110bn of investor bids for a new 10y bond it's offering in a publicly-syndicated sale which is the first since Mario Draghi took over as PM. (via BBG) pic.twitter.com/j7s1YfM5oT

5.11pm GMT

Bitcoin has now slipped back down to $48,400 - only slightly up on the day.

Fawad Razaqzada, market analyst with ThinkMarkets, reckons some investors will be taking profits, as the $50k milestone had been seen as a key target.

Going forward, if Bitcoin finds itself holding above $50K in the days ahead, then we could see renewed bullish momentum come into play and drive prices towards $55K next. There are no obvious technical levels to watch on the upside, except the big milestones like 55K, $60K etc.

Bitcoin remains fundamentally supported because of growing demand as major companies warm towards cryptocurrencies. So, we may not see the repeat of the late 2017-style sell-off. Bitcoin has become a lot more stable and although it will dip here and there, it is unlikely to lose half of its value like it repeatedly did in the past. But in so far as the short-term is concerned, Bitcoin will need to hold its own above the $50K to keep the bullish momentum alive, otherwise a short-term correction could be on the cards.

5.09pm GMT

The US stock market has also handed back its early gains.

The Dow is now flat, while the S&P 500 is down 0.2% and the tech-focused Nasdaq has dipped by 0.6%.

4.55pm GMT

After a bright start, the London stock market has closed slightly lower.

The FTSE 100 dipped by 7 points, or 0.1%, to 6748, having hit a new one-month high this morning.

4.25pm GMT

European Central Bank governing council member Gabriel Makhlouf has struck a cautious note - saying he wouldn't buy Bitcoin.

Makhlouf also compared investment in the world's largest cryptocurrency to the 17th century Netherlands tulip craze -- which ended in collapse, Bloomberg reports.

Reminded of the Dutch tulip craze, ECB's Makhlouf won't buy bitcoinhttps://t.co/v4xAHKbuJc via @DaraDoy pic.twitter.com/NfQpzGNn0R

4.00pm GMT

Having surged over $50,000, bitcoin has slipped back a little - currently trading around the $49,000 mark.

Russ Mould, investment director of AJ Bell, says bitcoin's longer-term prospects depend on whether more people embrace the cryptocurrency:

The more people that adapt it and use it as money, then the greater the chances of it perhaps being taken on board as a mainstream currency.

That would feed further speculative interest."

3.54pm GMT

Elon Musk's move into bitcoin has been pretty successful so far....

Who needs to actually make profitable cars when you can..

Elon Musk's purchase of $1.5 billion in bitcoin is now profitable to the tune of about $500-$750MM in just weeks. #bitcoin $btc

I don't think there is a case to be made for investing corporate cash in a risky asset like bitcoin, where they could experience significant declines."

3.28pm GMT

City Index also point to the rising number of investors showing interest in bitcoin, saying:

The latest surge in Bitcoin comes after Tesla announced that it was investing $1.5 billion in it.

However, Tesla isn't the only company to begin jumping into the cryptocurrency pool. BNY Mellon is developing custody ability, as they are expecting Bitcoin to be used as payment in the future. Mastercard said they are planning to accept transactions in Bitcoin. Morgan Stanley is considering whether to set up a unit to delve into the space.

Can Bitcoin continue higher? Anything is possible. As more firms on the commercial side become interested in diversifying into the cryptocurrency space, it will add to the excitement surrounding Bitcoin. However, traders may want to tread lightly in the space given the extremely volatility cryptocurrencies have seen over the last few months.

Bitcoin pierces 50,000 for the first timehttps://t.co/3fZFFYzY9l pic.twitter.com/qGsQwbPvSY

3.02pm GMT

Enterprise software maker Salesforce.com is the top riser on the Dow Jones industrial average, up 3%, followed by oil producer Chevron (+2%) and chemicals firm Dow Inc (+1.9%).

Industrial stocks are also rallying, with construction machinery maker Caterpillar up 1.5% and aircraft manufacturer Boeing up 0.9%.

2.56pm GMT

Bitcoin soared through the key $50,000 level on Tuesday for the first time as the growing acceptance of the world's biggest cryptocurrency among large banks and investment funds continued to draw in mainstream investors, my colleague Phillip Inman writes.

After a meteoric rise in which its value increase by 75% since the start of the year, bitcoin hit $50,547.70 in European trading at around 12.35pm GMT.

2.40pm GMT

Wall Street has followed bitcoin's lead, and hit fresh record highs.

Dow hits record high

S&P 500 hits record high

Nasdaq composite index hits record high

2.11pm GMT

We also have encouraging economic news -- manufacturers in the state of New York report that conditions have improved this month.

The New York Fed's Empire State Manufacturing Survey has risen to 12.1 in February from 3.5 in January, higher than expected.

The Empire State Manufacturing Index rebounded to 12.1 in February from 3.5 in January, beating Econoday's consensus for 5.7, with forecasts ranging from 4.2 to 10.0. pic.twitter.com/8seEOsyesj

@NYFedResearch Empire State #Manufacturing index +8.6pts to 12.1 in Feb (high since July)
- New orders
- Shipments
- Delivery times
- Inventories
- Employment
- Input prices fastest pace in a decade

Firms optimistic abt next 6mo & capital spending plans
at yr high pic.twitter.com/aEAQB5Y5g9

1.54pm GMT

One theory behind bitcoin's rally is that cryptocurrencies can act as digital gold' - a store of value, rather than a medium of exchange (where bitcoin's volatility is problematic).

As there around 18m bitcoin in existence, with a maximum of 21m coded into the system, it's possible to come up with price targets based on bitcoin supplanting bullion.

If that narrative [of digital gold] comes to fruition, then the growth potential is off the charts as $50,000 per bitcoin equates to a market cap of roughly $931 billion, which is almost 9% of gold.

If BTC meets gold's market cap, then that would be at least $500,000 per bitcoin."

BREAKING: #bitcoin crosses above $50,000 for the first time. @JoeSquawk and @andrewrsorkin discuss what the #btc milestone means. https://t.co/9MMA8ANxJQ pic.twitter.com/CCCgYxs9lE

1.35pm GMT

Bank of New York Mellon, the US's oldest bank, also gave bitcoin a boost last week, when it announced it would hold, transfer and issue bitcoin and other cryptocurrencies on behalf of its asset-management clients.

The move was seen as an important move towards Wall Street's acceptance of bitcoin. It means digital currencies would pass through the same financial network which BNY Mellon uses for traditional assets like shares and bonds (the Wall Street Journal has more details).

Bitcoin's incredible rise this year shows no sign of abating. This latest landmark shows how it now has to be considered a mainstream investment asset.

The fact that major multi-national corporations, from BNY Mellon to Mastercard, are queuing up to lend support to bitcoin demonstrates the clout it now holds. Its buying power is only going to become greater as more big names jump on board.

1.30pm GMT

1.27pm GMT

Sushil Kuner, principal associate at law firm Gowling WLG, flags up that policymakers are concerned about the use of cryptocurrencies (which are pseudonymous).

It will be interesting to see how companies respond to global anti-money laundering regulatory regimes when they have ambitions to accept Bitcoin as a form of payment.

Cryptoassets have long been criticised for facilitating financial crime including money laundering and fraud.

1.16pm GMT

Here's Reuters take on bitcoin's surge:

Bitcoin rose above $50,000 on Tuesday to a new record high, building on a rally fuelled by signs that the world's biggest cryptocurrency is gaining acceptance amongst mainstream investors.

Bitcoin hit a new high of $50,602, and was last up 5% at $50,300. It has risen around 72% so far this year, with most of the gains coming after electric carmaker Tesla said it had bought $1.5 billion in bitcoin.

Bitcoin vaults above $50,000 for first time ever https://t.co/XLRWLvFST3 pic.twitter.com/IBTvMCkoiF

Great wording in this AP Alert

NEW YORK (AP) - Seemingly everywhere in 2021, Bitcoin crosses $50,000 for the first time.

1.13pm GMT

Bitcoin's rally over the last six months is quite something.

Back in mid-August it was trading around $12,000, before accelerating through the autumn, hitting $20k for the first time in December.

We see this as a small but potent insurance policy against the continuing devaluation of the world's major currencies. Bitcoin diversifies the company's (much larger) investments in gold and inflation-linked bonds, and acts as a hedge to some of the monetary and market risks that we see'

12.51pm GMT

Bitcoin has surged over the $50,000 mark for the first time, as the cryptocurrency continues to hit record highs.

This means bitcoin has surged 70% so far this year, amid growing interest from some institutions, and Tesla, which bought $1.5bn of bitcoin.

There is a lot of FOMO among traders as price is going through the roof and we have limited supply.

And there it is...#Bitcoin jumps above $50k for the first time ever.

It's market cap is now poised to surpass $1 trillion. #bitcoin50k #btc50k pic.twitter.com/uJh6joub7H

And #Bitcoin establishes new record highs, now trading over $50,000 as actual and expected adoption grows in the private sector in the face of continued warnings from some official sector officials. #markets #Crypto #trading #currency #cryptocurrency pic.twitter.com/xYyngs3soA

I see the promise of these new technologies, but I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they've been a tool to finance terrorism."

12.38pm GMT

Virgin Wines is to float on the London Stock Exchange next month with a valuation of about 100m as the Covid-19 pandemic increases demand for its home delivery business model.

11.32am GMT

Back in the City, the early rally has rather fizzled out.

The FTSE 100 has dropped back from its one-month high, now down 4 points at 6751.

11.20am GMT

The Financial Times have an interesting story this morning - that China is considering limited exports of rare earth minerals to the US.

China is exploring limiting the export of rare earth minerals that are crucial for the manufacture of American F-35 fighter jets and other sophisticated weaponry, according to people involved in a government consultation.

The Ministry of Industry and Information Technology last month proposed draft controls on the production and export of 17 rare earth minerals in China, which controls about 80 per cent of global supply. Industry executives said government officials had asked them how badly companies in the US and Europe, including defence contractors, would be affected if China restricted rare earth exports during a bilateral dispute.

#China has been slowing its exports of #RareEarths , chart @BloombergTV https://t.co/YOyJSve2UM pic.twitter.com/TX5ZJ8PasF

10.58am GMT

Fund managers are extremely optimistic about the global economic outlook, according to Bank of America's latest survey.

It found that cash levels are at their lowest in several years, as investors pile into assets such as stocks and commodities.

Cash levels in investment portfolios have hit the lowest since just before the so-called taper tantrum of 2013, according to Bank of America's February fund manager survey, which also showed investors to be overwhelmingly bullish on the economic outlook.

World stocks have been notching successive record highs in 2021, with central banks remaining supportive and governments injecting money into the system to get economies up to speed after the damage caused by COVID-19.

Bubble for #stocks? Nah... pic.twitter.com/xWGMDfWEdn

The only reason to be bearish is there is no reason to be bearish:" BofA fund manager survey. The survey shows global growth expectations at all-time high, cash levels at 8-year low, equity & commodity allocations at highest since 2011, & only 13% say it's a bubble.

BofA February Global FMS
"The only reason to be bearish is, there is no reason to be bearish"

Cash is trash: FMS cash level down to 3.8%, lowest since Mar'13"

Allocation to stocks & commodities highest since Feb'11" pic.twitter.com/hUe0wuQ6Qc

From the latest @BofA_News Fund Manager Survey: Cash levels at 8-year lows; sentiment at all-time high; equity allocations highest in a decade....and only 13% think there's a bubble.

10.42am GMT

Cryptocurrency bitcoin struck a fresh record high earlier this morning, touching $49,972 for the first time before dipping back (it's currently trading around $48,800).

#Bitcoin extends its rally to an ATH close to $50,000. pic.twitter.com/LbSzgePiRD

10.28am GMT

Investor sentiment in Germany has jumped this month, lifted by hopes that consumer spending will surge as the pandemic lockdown ends.

The ZEW economic research institute reports that its survey of investors' economic sentiment jumped to 71.2 points in February, from 61.8 in January.

The financial market experts are optimistic about the future. They are confident that the German economy will be back on the growth track within the next six months.

Consumption and retail trade in particular are expected to recover significantly, accompanied by higher inflation expectations."

Good news for Eurozone business morale: Germany ZEW Economic Sentiment index rises to 71.2 in Feb from previous 61.8. Analysts expected a decrease to 59.6@graemewearden

German ZEW Survey with a familiar theme - deteriorating current situation but optimstic outlook.

Been this way a while with the divergence near record levels - will correct eventually but been a long time thus far pic.twitter.com/znJtbJCZel

Extremely strong economic numbers, German ZEW came out and this is helping the Euro to move higher

10.27am GMT

The eurozone shrank slightly less than first thought at the end of 2020, new data shows, but it still faces a double-dip recession.

Eurozone GDP shrank by 0.6% in the October-December quarter, statistics body Eurostat has reported.

Euro area #GDP -0.6% in Q4 2020, -5.0% compared with Q4 2019: flash estimate from #Eurostat https://t.co/tFQkV0GjvN pic.twitter.com/h5eBhP77B4

The indignity... Eurostat seems to have removed the UK from its data tables but is still including some other non-EU countries inc Switzerland and the United States.
A shame in this case as UK Q4 GDP growth was considerably stronger than the EU average. pic.twitter.com/gbDXmqjTTQ

Euro area #employment +0.3% in Q4 2020, -2.0% compared with Q4 2019: flash estimate from #Eurostat https://t.co/tFQkV0GjvN pic.twitter.com/lWWgbJ4AX9

10.06am GMT

Charles Bond, natural resources partner at law firm Gowling WLG, says the record interim dividend at BHP Billiton, and the restored dividend at Glencore, are part of a developing trend.

It reflects the strong growth in the commodity markets being fuelled by new infrastructure and the energy transition as we move away from Covid.

9.57am GMT

The pound has touched a new 33-month high against the US dollar this morning, amid optimism that the UK economy will rebound when lockdown restrictions are lifted.

Sterling rose to $1.395, up half a cent, having already hit its highest level since the end of April 2018 on Monday.

The British pound continues to edge higher versus other major currencies during early Tuesday trading. Sterling's performance is defying the forecasts of most analysts, who saw the post-Brexit constraints and the economic impact of the pandemic in Britain as strong headwinds for the currency.

However, the pound is finding support amidst a global rise in investor confidence, that is proving positive for risk related assets, and because of the success of the British vaccine rollout, which has placed the country ahead of its peers and in pole position for the post-pandemic economic rebound.

9.47am GMT

In other mining news, BHP Billiton has announced a record $5.1bn interim dividend as half-year profits hit a seven-year high on the back of surging prices for iron ore.

The world's largest miner hiked its interim dividend to $1.01 a share, up from $0.65 a year ago, as strong demand for iron ore cushioned the impact of the pandemic.

BHP's half-year profit fell to US$3.87bn compared to the same period in 2019, driven down mostly by a total of US$2.2bn in exceptional items that included slashing the value of the thermal coal assets and US$200m of covid-related costs.

But profits from its operating business, which is dominated by iron ore, soared by 17% to US$9.8bn.

9.39am GMT

A $9.2bn (6.5bn) deal to create the world's largest classified ads business could reduce consumer choice and increase the fees people are charged for advertising goods online, Britain's competition watchdog has warned.

9.28am GMT

Shares in mining group Glencore have jumped 3%, after the group reinstated its dividend this morning.

As the world focuses on the pathway to recovery from Covid-19, it is clear that meeting the goals of the Paris Agreement has taken on even greater urgency.

While innovation and technological advances have transformed how we live and work, the commodities needed to enable this have not. Our commodities are essential in developing all facets of infrastructure needed to deliver the goals of energy and mobility transition.

9.00am GMT

Reflation is roaring: Global rally showing no signs of exhaustion w/MSCI ACWI on track for its 12th up session in a row. Germany's Dax on course to new ATH. Bonds shaky w/US 10y yields at 1.23%, highest since Mar. Oil remains at elevated level w/WTI >60. Gold 1820, #Bitcoin $49k. pic.twitter.com/mfG9r6azAW

9.00am GMT

Hopes of a large and fast-moving' US stimulus package are driving the global stock market rally, says Stephen Innes, chief global markets strategist at axi.

The real stock market boosting surprise this week may have to do with the quick end to former US President Trump's impeachment on Saturday as the Democrats didn't bring forward witnesses, which could have dragged things out for weeks.

The reason for the decision appears to be that the Democrats want to entirely focus on the proposed fiscal stimulus package and not be encumbered by the impeachment process, which was never likely to result in a guilty verdict anyway.

8.49am GMT

European stock markets are more muted today, after hitting their highest levels in almost a year on Monday.

The Europe-wide Stoxx 600 is up just 0.1%.

8.09am GMT

The UK stock market has opened higher, with the FTSE 100 gaining 40 points or 0.6% to 6796 points.

That's its highest level since 15 January, as the Footsie heads back towards the 11-month highs seen earlier this month:

7.53am GMT

UBS Wealth Management predict that Asia's stock markets will remain strong this year (the Year of the Ox).

While the rally in Asia may be more measured from here on, we still see another 10% upside for Asia ex-Japan equities by the year-end. We favour reasonably priced quality cyclical names, especially in the internet, memory and media sectors.

We see catch-up opportunities in select industrials, financials, materials and energy."

7.49am GMT

Asia-Pacific markets have had another strong day.

Japan's Nikkei has hit a fresh 30-year high today, jumping 1.28% or 383 points to close at 30,467 points.

Hong Kong stocks rise in their first session in the Year of the Ox, with the Hang Seng above 30,000
Imax China sees double-digit gains
China markets remain closed https://t.co/P4MtqkJHAs pic.twitter.com/FdHpK8qN4x

Although not showing quite the same momentum as yesterday, a combination of dovish central banks, and the ever-present US stimulus and vaccine hopes have kept equity markets in business as usual mode.

7.35am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Global stock markets are continuing to strengthen, with stock prices at record levels.

The global reflation theme continued apace yesterday, and risk assets showed continued strength across multiple asset classes. In fact the MSCI World Index, which includes a range of developed world equities, rose for an 11th straight session, marking the longest winning streak for the index since January 2018.

If it manages to notch a 12th gain today, it'll become the longest winning run since December 2003, back when Arsenal were on their way to winning the Premier League unbeaten, and before most UK households had internet access.

European Opening Calls:#FTSE 6778 +0.32%#DAX 14116 +0.05%#CAC 5794 +0.14%#AEX 686 +0.10%#MIB 23624 +0.08%#IBEX 8228 +0.29%#OMX 2038 -0.09%#STOXX 3736 +0.05%#IGOpeningCall

FTSE 100 set to jump again https://t.co/cH9JqDMYwG

Over 15 million people have received coronavirus vaccine in the UK, and this is giving the government confidence that they can not only achieve their other targets but also ramp up their vaccination process.

In addition to this, if one looks at the number of people losing their lives because of coronavirus along with the hospitalization rate and new people catching coronavirus, all of them have started to drop quite a lot from their recent high.

The MSCI World Index's historical price-to-earnings ratio is trading at the highest level since the end of 2009 - Bloomberg
*That comes as the gauge posted its 11th straight daily advance Monday, the longest such streak since July of that same year. pic.twitter.com/x4gk8lrr6J

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