By Geoffrey Smith
Investing.com -- Cryptocurrencies recover – a bit – after a sharp correction over the weekend with obscure origins. The pandemic worsens in India and other emerging markets, but the dollar is nonetheless weakening as investors bet on global growth recovering. Coca Cola and IBM start a heavy week for earnings, Tesla (NASDAQ:TSLA)'s self-driving software is under scrutiny after a fatal accident, and Europe’s richest soccer clubs squeeze UEFA for more money to cover their rising debts. Here’s what you need to know in financial markets on Monday, April 19th.
1 Crypto recovers from weekend slump
Cryptocurrencies regained their footing after a sharp correction over the weekend in which Bitcoin fell as much as 15% at one point.
Fundamental triggers were hard to identify with any certainty. Some reports said the catalyst had been speculation over an imminent crackdown on money-laundering by U.S. authorities; others attributed it to a power outage in Xinjiang, where much of the world’s bitcoin mining is done (powered notoriously by high-polluting coal-fired power stations).
Rumours of an imminent ban on holding cryptocurrency in India appear to have been mistaken (although the Indian rupee’s weakness has prompted speculation that the Reserve Bank of India may follow the example of Turkey’s central bank in stopping capital flight into crypto).
By 6:30 AM ET, Bitcoin had recovered around one-third of its losses to trade around $56,500, as first-time investors appeared to buy the dip with enthusiasm. Ethereum was likewise off its weekend lows but still down by around 12% from last week’s highs.
2. Pandemic worsens but dollar still slides
More people worldwide were diagnosed with Covid-19 last week than at any other time since the pandemic erupted over a year ago, the World Health Organization said.
The statistic underscores how badly out of control the coronavirus is running in emerging markets which have little access to vaccines and lack the social safety nets that would allow their economies to be locked down effectively.
Despite that, most emerging currencies are gaining against the dollar in anticipation of stronger global growth over the year as a whole. The exception was India's rupee, which slid another 0.5% as new infections hit another record high.
Developed market currencies also advanced against the dollar, both havens and high-yielders. The EUR/USD topped $1.20 for the first time in six weeks as the yield premium on U.S. bonds over their euro equivalents faded further.
3 Stocks set to open lower as market waits for Coke, Big Blue
U.S. stock markets are set to open a touch lower ahead of a heavy week for earnings that kicks off with Coca-Cola (NYSE:KO) before the open and IBM (NYSE:IBM) after the close in Monday.
By 6:30 AM ET, Dow Jones futures were down 65 points, or 0.2%, while S&P 500 futures were down by a fraction less and Nasdaq 100 futures were down by less than 0.1%.
Stocks closed last week at record highs, riding a wave of optimism generated by robust U.S. economic data and confidence that both fiscal and monetary policy will stay supportive for the foreseeable future.
Companies in focus later may include lithium miner Albemarle (NYSE:ALB), after a merger between two large Australian lithium miners provided a new valuation benchmark for the sector. Also in focus, due to the crypto dip, will be Coinbase (NASDAQ:COIN) stock, which was down 2.4% in premarket trading by 6:15 AM ET.
4. Tesla's self-driving limitations fatally exposed, again
The credentials of Tesla’s autonomous driving software are set for a fresh examination after a fatal crash in Texas at the weekend.
Harris County police said two people died when the Tesla car left the road and crashed into a tree (the resulting fire took 32,000 gallons of water to extinguish the flames because the vehicle’s batteries kept reigniting, according to reports). Neither man was sitting in the driver’s seat, suggesting that they had relied on the car’s ‘Full Self-Driving’ software to navigate.
Tesla has already told the National Highway Transportation Safety Authority that its FSD software, in its current state, cannot provide more than Level 2 autonomy, an admission that contrasts with CEO Elon Musk’s repeated tub-thumping on the subject.
5. Europe soccer aristocrats threaten breakaway league
Some of Europe’s biggest soccer clubs announced plans to break away from the game’s international establishment and set up a closed league akin to the franchise-based systems in U.S. sport.
The move comes against a background of rising debt at traditional aristocrats such as Real Madrid and Barcelona, caused by the loss of match day ticket sales over the last year and by the relentless competition for talent that consistently squeezes profit margins in the sport.
Shares in Turin, Italy-based Juventus – one of the driving forces behind the move, rose 12% in response to the news. Shares in Germany’s Borussia Dortmund, which reportedly refused to sign up to the new venture, rose 9% in Frankfurt, on perceptions that the latest spat will end as previous ones have done – with the richest clubs squeezing more money for themselves out of UEFA’s Champions League tournament. Not coincidentally, UEFA's executive committee meets today to decide on a reform of the Champions League.