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Central Bank Action, Bitcoin Stays Down, Hot Metals - What's Moving Markets

EconomySep 08, 2021 12:10
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By Geoffrey Smith -- Europe's stock markets tumble on fears that the European Central Bank may reduce its bond buying at Thursday's meeting. Central banks in Canada and Poland meet later to decide what to do with runaway inflation. U.S. stocks are set to open lower amid fears of an economic slowdown and Bitcoin is still down in the dumps after Tuesday's fiasco in El Salvador. Meanwhile base metals prices continue to roar higher, as do energy costs. Here's what you need to know in financial markets on Wednesday, 8th September.

1. ECB fears hit European markets

European stocks fell after a fresh warning that the European Central Bank may start to reduce its quantitative easing program already at its council meeting on Thursday.

Austrian National Bank Governor Robert Holzmann said in a magazine article that the bank may be able to reduce its bond purchases faster than the market expects, owing to better-than-expected growth figures.  While a noted hawk who has been in the minority for much of the recent past, Holzmann’s comments chime with the upward revision to Eurozone GDP in the second quarter earlier this week.

Analysts note that a reduction in the ECB’s monthly asset purchases may still only bring them back to where they were at the start of the year, given that the bank increased them to head off a rise in bond yields earlier in the year. The euro fell 0.2% against the dollar to $1.1814, while the Euro Stoxx 600 fell 0.8%.

2. Canada, Poland central banks face inflation dilemma

Other central banks have decisions to make later Tuesday too. The Bank of Canada is now widely expected to shy away from its intention to tighten policy when its board meets, as the spread of Delta variant Covid-19 in the U.S. spills over into an economic slowdown on both sides of the border. The decision is due at 10 AM ET.

The National Bank of Poland, meanwhile, is under more pressure to raise interest rates, after inflation equalled a 10-year high in August.  Its decision is at 1130 AM ET.

Russia’s central bank is also expected to hike its key rate at its meeting on Friday, and August’s inflation data, which are due at 12 PM ET today, will have a strong influence on its thinking.  

3. Stocks set to open lower; JOLTS survey eyed

U.S. stocks are set to extend their losses at the open later, amid lingering concerns about the slowdown of the economy due to the latest wave of the pandemic.

By 6:15 AM ET, Dow Jones futures were down 54 points, or 0.2%, while S&P 500 futures and Nasdaq 100 futures were both down less than 0.1%.

The main economic data of the day will by the JOLTS job opening survey at 10 AM ET. The number of vacancies has recorded four straight record highs in recent months, amid widespread reports of skills shortages.

Stocks likely to be in focus include Chinese EV maker Nio (NYSE:NIO) and dating site operator Bumble, both of which announced secondary share offerings late on Tuesday. Paypal will also be in the spotlight after agreeing to acquire ‘buy-now-pay-later’ fintech Paidy for $2.7 billion.

4. Bitcoin struggles to recover from dump after El Salvador pump

Bitcoin and other crypto assets recovered some of their losses after a sharp slide on Tuesday, when the world’s biggest digital currency its new status as legal tender in El Salvador failed to generate any sustained enthusiasm for it.

By 6:15 AM ET, Bitcoin was down 9.8% at $46,152. Ethereum was down 11% and Cardano was down 12%.

The El Salvadorean government had been forced to suspend registrations of its wallet app Chivo on Tuesday, citing technical problems. The fiasco deepened popular mistrust of the initiative among the country’s citizens.

President Nayib Bukele, whose popularity has also suffered as a result of his attempts to cement his hold on power beyond his constitutional six-year term, was unapologetic, saying via Twitter (NYSE:TWTR) that the government had used the dip to buy another 150 Bitcoin.

5. Aluminium hits 13-year high; steel, power prices surge

Commodity prices continue to show pockets of intense inflationary pressure, with aluminium futures hitting a 13-year high and the price of hot-rolled steel coil in the U.S. nearing $2,000 a ton. Both are being squeezed higher by Chinese efforts to reduce pollution by curbing domestic output.

In Europe, meanwhile, U.K. wholesale electricity prices have risen to over 300 euros a megawatt-hour due to the lack of wind generation and a scarcity of natural gas, forcing the country’s remaining coal-fired units to ramp up output.

Oil prices are also higher, as the Gulf of Mexico’s production and refining complex still struggles to restore production. By 6:30 AM ET, U.S. crude futures were up 1.3% at $69.25 a barrel, while Brent was up 1.2% at $72.56 a barrel. The American Petroleum Institute releases its inventory data later.

Central Bank Action, Bitcoin Stays Down, Hot Metals - What's Moving Markets

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