World equities mostly rose Tuesday on a wave of growing economic optimism and bitcoin hit a new peak on runaway demand, dealers said.
Europe’s major stock exchanges were higher at midday after Asia mostly climbed, but traders remain cautious before this week’s critical US inflation data.
The world’s most popular cryptocurrency Bitcoin surged to a historic high of $68,513, while the dollar dipped versus the euro and yen.
Investors are awaiting vital US consumer price inflation data due Wednesday, preceded by the producer price index on Tuesday.
“The main focus of investors this week will be updates on inflation,” said AvaTrade analyst Naeem Aslam.
“Because of rising energy costs and supply chain constraints, inflation is likely to have surged.”
Traders have been in buoyant mood since the US Federal Reserve last week unveiled its plan for withdrawing its vast financial support but said it would move cautiously in raising interest rates.
Analysts said other central banks had been less keen to tighten policy than investors had expected.
Still, the Fed warned Monday that the rally across markets could quickly reverse if there was another Covid surge or the recovery stalls, and also raised concerns about the possible impact of China’s property crisis.
All three main indexes in New York had hit record highs for the second day in a row on Monday on news that US lawmakers had passed President Joe Biden’s $1.2-trillion infrastructure overhaul, and as the country reopened to vaccinated visitors from more than 30 countries.
That all came on top of a strong earnings season and after Pfizer’s announcement that a pill to treat Covid had proved to be hugely effective, putting the world another step closer to overcoming the disease.
Bitcoin meanwhile scaled new historic heights as the combined value of all cryptocurrencies topped $3 trillion, according to data provider CoinGecko.
“This breakout in bitcoin might signal the start of a final push-up for the fourth quarter before the crypto market shows more pronounced consolidation into next year,” Fundstrat said in a report on Monday.
“Strength in bitcoin, ethereum and many other altcoins looks likely in the weeks to come.”
– Spectre of inflation –
Still, the spectre of inflation continues to loom large, with prices at multi-year highs owing to supply chain snarls, surging energy costs and a pick-up in demand as the economy returns to normal.
While the Fed has said it will be careful in hiking borrowing costs, Vice Chair Richard Clarida said the economy could be ready for a lift by the end of next year.
However, other top Fed officials took a more dovish view on the outlook and the timing of a rate increase.
“So, the conclusion is that just like the market, Fed officials are not a hundred percent sure how inflation dynamics will play out,” said Rodrigo Catril at National Australia Bank.
– Key figures around 1200 GMT –
London – FTSE 100: UP 0.2 percent at 7,312.35 points
Frankfurt – DAX: UP 0.3 percent at 16,092.84
Paris – CAC 40: UP 0.4 percent at 7,073.38
EURO STOXX 50: UP 0.2 percent at 4,361.57
Tokyo – Nikkei 225: DOWN 0.8 percent at 29,285.46 (close)
Hong Kong – Hang Seng Index: UP 0.2 percent at 24,813.13 (close)
Shanghai – Composite: UP 0.2 percent at 3,507.00 (close)
New York – Dow: UP 0.3 percent at 36,432.22 (close)
Euro/dollar: UP at $1.1598 from $1.1587 at 2200 GMT Monday
Pound/dollar: UP at $1.3598 from $1.3563
Euro/pound: DOWN at 85.29 pence from 85.43 pence
Dollar/yen: DOWN at 112.86 from 113.23 yen
Brent North Sea crude: UP 0.5 percent at $83.82 per barrel
West Texas Intermediate: UP 0.6 percent at $82.38 per barrel
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