Stocks struggled for momentum on Monday as investors awaited key U.S. inflation readings for guidance on monetary policy, while bitcoin rebounded from its hammering on news of China’s clampdown on mining and trading of cryptocurrencies.
The MSCI world equity index was 0.1% firmer.
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.2% in slow trade. Japan’s Nikkei added 0.2% and Chinese blue chips 0.4%. Nasdaq futures rose 0.4% and S&P 500 futures firmed 0.5%.
Sovereign dollar bonds issued by Belarus shed as much as 2 cents after Belarusian authorities on Sunday forced an airliner to land and arrested an opposition-minded journalist who was on board, drawing condemnation from Europe and the United States.
After the strong growth shown by Friday’s surveys of the global services sectors, all eyes will be on U.S. personal consumption and inflation figures this week.
A high core inflation reading would ring alarm bells and could revive talk of an early tapering by the U.S. Federal Reserve.
Commodities push
The diary has a crowd of Fed speakers this week, including influential Fed Board Governor Lael Brainard, and markets will be keen to hear if they stick to the script on being patient with policy.
BofA’s monthly Fund Manager survey found a record 69% of respondents expected above-trend economic growth and inflation globally.
As a result, managers had pushed into commodities and late-cyclicals, where overweight positions were close to 15-year highs, while the single most crowded trade was Bitcoin.
“With such bullish views on growth and inflation, the risk for investors is that growth slows and inflation proves temporary,” BofA analysts said in a note.
“Also, Tech, viewed as crowded fairly recently, is now back to an underweight and would likely benefit if inflation fears ebbed.”
Gold in favour
After shedding 13% on Sunday, bitcoin was up 6% on Monday at $36,735 but still more than 40% off its all-time high.
It was hurt in part by China’s crackdown on mining and trading of the largest cryptocurrency as part of ongoing efforts to prevent speculative and financial risks.
The major currencies were staid in comparison, with the euro holding at $1.2197 after repeatedly failing to clear chart resistance around $1.2244 last week.
The dollar was idling on the yen at 108.74, pinned between support at 108.56 and resistance around 109.33. Against a basket of currencies, the dollar had steadied at 89.920 after hitting its lowest since January at 89.646 on Friday.
In bond markets, Friday’s dovish comments from Lagarde kept borrowing costs below recent multi-month highs.
