Asia shares wary on U.S. inflation, Bitcoin struggles to steady

  • 5/24/2021
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Asian shares were mixed on Monday as investors awaited key U.S. inflation readings for guidance on monetary policy, while Bitcoin tried to steady after being hammered on news of China"s clampdown on mining and trading of cryptocurrencies. MSCI"s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) dipped 0.1% in slow trade. Japan"s Nikkei (.N225) added 0.2% and Chinese blue chips (.CSI300) 0.2%. Nasdaq futures rose 0.1% and S&P 500 futures firmed 0.3%. EUROSTOXX 50 futures and FTSE futures added 0.2%. After surveys of the global service sectors out on Friday showed spectacular growth, all eyes will be on U.S. personal consumption and inflation figures this week. A high reading for the core inflation figures would ring alarms and could revive talk of an early tapering by the U.S. Federal Reserve. The diary has a crowd of Fed speakers this week, including the 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." The crowded trade in Bitcoin left it vulnerable to a selloff as investors rushed to the exits en masse, seeing it down 50% from its all-time high. The cryptocurrency shed 13% on Sunday alone, but was last trading up 1.9% at $35,350 . 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. read more The major currencies were staid in comparison, with the euro holding at $1.2184 after repeatedly failing to clear chart resistance around $1.2244 last week. The dollar was idling on the yen at 108.84 , pinned between support at 108.56 and resistance around 109.33. Against a basket of currencies, the dollar had steadied at 90.032 after hitting its lowest since January at 89.646 on Friday. The softness of the dollar combined with concerns about inflation and the wild volatility of cryptocurrencies to put gold back into favour. The metal was last at $1,884 an ounce , after reaching its highest since January. "The recent mix of strong U.S. CPI, weak employment, and Fed policymakers willing to let inflation overshoot while targeting the employment gap, could remain gold bullish for a while longer," said Michael Hsueh, commodities & FX strategist at Deutsche Bank. "Gold"s recovery has been associated with the strong rally in some parts of the commodities complex, increasingly represented by agriculture, metals and transport indices this year, and an eight-yr high in U.S. 10-year inflation expectations." Oil prices edged higher as a storm formed in the Gulf of Mexico and Iran said a three-month nuclear monitoring deal had expired, raising doubts about the future of indirect talks that could end U.S. sanctions on Iranian crude exports. Brent was last up 40 cents at $66.84 a barrel, while U.S. crude added 39 cents to $63.97 per barrel.

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