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Crypto Pressured Again, Jobless Claims, Iran Deal Hits Oil - What's Moving Markets

EconomyMay 20, 2021 12:08
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By Geoffrey Smith -- Bitcoin steadies, but the rest of the crypto universe remains under pressure after Wednesday's crash. Weekly jobless claims may soothe or stoke nerves with regard to inflation and an early withdrawal of Fed stimulus. More retail earnings may do the same thing. And Iran's President claims a breakthrough that could allow it to ship more oil to world markets. Here's what you need to know in financial markets on Thursday, May 20th.

1. Crypto still under pressure

Crypto assets remained under pressure for a second day, although there were no fresh fundamental triggers similar the Chinese regulatory actions announced on Wednesday.

Bitcoin again dipped below $40,000 and was down 1.3% by 6:15 AM ET (1015 GMT) at $39,851. Attention is focused on whether it can break back decisively above its 200-day moving average, after falling below it on Wednesday.

Losses in altcoins were bigger, seemingly due to traders using the weakness in Bitcoin to switch into the more liquid unit. Ethereum fell another 10% to $2,670 while Dogecoin fell 14% to 36.17 cents.

Wednesday’s rout had reached its peak early in the U.S. day as various crypto exchanges struggled to process sell orders. Coinbase Global (NASDAQ:COIN), the biggest crypto exchange operator, was up slightly in premarket after falling 6% to a new record low on Wednesday.

2. Jobless claims, Philly Fed due

The U.S. releases initial jobless claims data at 13:30BST into a market still unnerved by the details of the Federal Reserve’s latest policy discussions.

The minutes of the April Fed meeting showed the policy-making committee inching slowly toward discussing a reduction in bond purchases. Analysts said action is still unlikely before year-end but the change of the tone in the discussion is still noteworthy.

Initial claims for jobless benefits are expected to fall to a new post-pandemic low of 450,000, from 473,000 last week. If confirmed, that would further mitigate the shock of the disappointing labor market report for April.

Also at 13:30BST, the Philadelphia Federal Reserve will release its monthly survey of business conditions.

3. Stocks set to open lower, again

U.S. stocks are set to open lower for a fourth straight day, amid pressure on retail investor portfolios spilling over from the crypto space, and continuing concern about an early withdrawal of monetary stimulus by the Federal Reserve.

By 6:30 AM ET, Dow Jones futures were down 155 points, or 0.5%, while S&P 500 futures and NASDAQ Futures were down by 0.4% each.

Stocks likely to be in focus later include Cisco (NASDAQ:CSCO), which slumped in after hours trading on Wednesday after predicting disruptions from the global chip shortage, and Ford, which said it will have to stop production of even its most profitable models again in June due to the same issue.

4. Consumer strength in earnings spotlight

More earnings reports from consumer-facing companies will keep the inflation risk uppermost in market minds later, after evidence so far this week of extremely strong consumer spending from Walmart (NYSE:WMT), Home Depot (NYSE:HD), Lowe’s (NYSE:LOW) and others.

Thursday’s roster includes updates from Ross Stores, Hormel Foods, Kohls and Ralph Lauren, while across the border, Canadian pot company Tilray also reports.

Wednesday’s after-hours session had also included stronger-than-expected updates from travel specialist and L Brands (NYSE:LB).

Most of those reports have profited from consumers splurging their stimulus checks, an event that is unlikely to be repeated later this year. Many of the companies concerned have issued cautious guidance for the rest of the year, uncertain of how pent-up demand will be released as the economy reopens.

5. Iranian President claims breakthrough on lifting sanctions

Crude oil prices fell sharply as Iranian President Hasan Rouhani claimed that a significant framework agreement had been reached on restoring the 2015 UN-backed deal limiting its nuclear program.

“They have agreed to lift all major sanctions,” newswires quoted Rouhani as saying. He specified sanctions including oil sales, and those on the petrochemical, shipping, insurance and banking industries, including its central bank. EU diplomats were quoted as saying there had been “tangible progress”, without endorsing Rouhani’s comments.  There was no comment from the U.S. side.

The prospect of rising supplies of Iranian crude to the world market pushed U.S. crude futures down 1.8% to $62.23 a barrel, and Brent futures down 2% to $65.24 a barrel.

Crypto Pressured Again, Jobless Claims, Iran Deal Hits Oil - What's Moving Markets

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Rahul Ahmed
Rahul Ahmed May 20, 2021 13:19
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