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The world's biggest cryptocurrency jumped more than 8%
above $42,000 on Monday, its highest since April 2022.
Bitcoin is up by over 150% so far this year - with its
price standing at $17,140 a year ago - though the current
price is still more than 40% lower than its all-time high
in 2021.
Meanwhile, gold has been shining once again, as safe haven
investments do in periods of geopolitical volatility.
An attack on an American warship and commercial vessels in
the Red Sea on Sunday kept investors on their toes and
inflamed fears that the Israel-Hamas war could widen into
a broader conflict.
The precious metal reached a new record, amidst
expectations that the US Federal Reserve (Fed) will cut
interest rates next year, as well as tension in the Middle
East and a weaker dollar. The price shortly visited $2,144
an ounce, an all-time high, before easing back around
$2,090 in the Monday morning trade.
"The market is sensitive to any expansion of this
conflict," said Quincy Krosby, chief global strategist at
LPL Financial. "I think active managers in any event are
more likely to lock in their gains if this is a harbinger
of a deeper military conflict that involves the US."
Oil prices are down
Despite some expectations and the rising geopolitical
tensions, oil prices went south, pressured by investor
scepticism over the latest OPEC+ decision on supply cuts
and uncertainty surrounding global fuel demand, though the
risk of supply disruptions from the Middle East conflict
limited losses. Monday's fall adds to a 2% decline last
week after the supply cuts announced on Thursday by the
Organization of the Petroleum Exporting Countries (OPEC)
and allies including Russia, together known as OPEC+.
Brent crude futures were hovering above $78 and WTI crude
futures fell below $74 per barrel on Monday morning.
How did data from Europe set the mood Monday morning?
The main European stock indexes showed a mixed picture on
Monday morning, with only the German DAX and the Spanish
IBEX 35 showing slight gains, as a handful of data has
been released to set a mood for investors.
The trade surplus in Germany increased to €17.8 billion in
October 2023, as exports fell by 0.2% compared to the
previous month to €126.4 billion. Imports however fell
more spectacularly to €108.6 billion, down by 1.2% from
the previous month and 16.3% from a year earlier, largely
due to lower energy prices.
Another positive development from the heart of Europe came
in the form of Switzerland's inflation rate slowing to a
two-year low. Prices rose 1.4% in November from a year
earlier, according to the Federal Statistics Office.
It's the final reading ahead of the Swiss National Bank's
(SNB) next interest rate decision on 14 December. The
SNB's current policy interest rate is at 1.75%, while its
inflation target range is 0% to 2%.
The European Central Bank (ECB) is also holding its
monetary policy meeting on 14 December and investors are
closely watching whether recent surprisingly good
inflation data was good enough news for the Eurozone
lender to relax its tight monetary policy.
However, ECB Vice-President Luis de Guindos cautioned the
markets of high uncertainty at a financial event on
Monday, adding that "it was too early to declare victory,"
writes Reuters.
What could drive investors' hands this week?
Markets are hungrily watching signs of easing inflation
and hope the Fed is done raising interest rates.
Asian stocks mainly fell on Monday amidst concerns over
China’s economic health. Indian shares were the exception,
as they rose fuelled by financial and energy stocks, while
key wins for the ruling party in state elections lifted
the domestic market.
US stocks closed at their highest level since March 2022
on Friday after comments from Fed chair Jay Powell fuelled
hopes that the central bank is done raising interest rates
and will start cutting rates sooner than expected.
On the wave of this, last Friday the S&P 500 (index
tracking 500 of the largest companies listed on stock
exchanges in the US) reached a new 2023 high.
This week, investors are going to closely watch oil
inventories in the US and the various jobs reports from
the country, as the world's biggest economy is expected to
pull a fast recovery and avoid recession next year.
As new jobs are a leading indicator of economic health,
Tuesday's JOLTs job openings, unemployment claims on
Thursday, and Friday's unemployment rate are certainly
going to drive investors' hands.
The next Fed monetary policy meeting is on 12-13 December.
In Europe, the Eurozone GDP and employment data due for
Thursday could give more details about the bloc's economy,
which is feared to be facing recession.