Cryptocurrency prices took another plunge on Friday after China launched its second broadside against bitcoin in three days.
The new swoon swept 12 percent of bitcoin’s value, 20 percent of ethereum and 18 percent of dogecoin and also seemed to be bleeding into the U.S. stock market, where tech-heavy Nasdaq dived close to its last hour of trading. low point for today.
A statement Friday by Chinese Deputy Prime Minister Liu He reiterating Beijing’s determination to curb mining and cryptocurrency trading led to the latest drop.
Crypto exchange Coinbase showed a bitcoin price of just over $ 34,000 on Friday afternoon in the US, still above the low of around $ 30,000 set Wednesday after the People’s Bank of China warned financial institutions not to accept cryptocurrencies as payment or offer related services and products. .
The technology-focused Nasdaq Composite index ended 0.5 percent lower on the day, although the index remained 0.3 percent higher this week.
The S&P 500 index closed 0.1 percent lower, also close to the day’s low and 0.4 percent lower than the week. The result marked the index’s first weekly losses since February.
On Wednesday, the Federal Reserve released minutes of its latest policy meeting, which showed that some of its interest payers thought the US central bank should “at some point” begin discussing “a plan to speed up asset purchases.” to adjust.
Global stocks were volatile leading up to the release of the minutes, but calmed down as analysts and investors responded to signals that the U.S. central bank was in no rush to cut $ 120 billion in monthly bond purchases boosting financial markets since March have given. last year.
“We remain skeptical that officials will be willing to send what could be perceived as a countdown countdown signal in June or July,” said Jim O’Sullivan, TD Securities chief macro strategist in the US, “which would likely be needed to to be announced before the end of the year ”.
On Friday, investors will be watching for signs of changes in economic output, suggesting business conditions in the US were booming.
The IHS Markit index for purchasing managers for the US, based on responses from manufacturing and services executives to questions on topics such as recruiting plans and new business, delivered its all-time high of 68.1 for May.
A reading of 50 distinguishes growth from contraction in the index, with the so-called flash readout for May being driven higher by what IHS called “the fastest service sector rebound ever recorded,” when previously closed sectors of the economy reopened.
While the PMI surveys are scrutinized for signs of economic recovery, they also provide insight into future levels of inflation that could hurt the real returns of stocks and bonds.
“The rate of inflation in input prices rose to a new record,” said IHS. And while Fed policymakers still largely view inflationary pressures as a temporary effect of a post-pandemic demand boom, a sustained rise in global equities has been halted over the past month as investors questioned whether the central bank was too slow could act to address price increases. .
“As economic activity steadily improves, stock markets will internalize that there is less need for monetary policy support as the data improves,” said Mobeen Tahir, research director at WisdomTree.
The price of spot gold, seen as a hedge against inflation, traded at $ 1,880 an ounce on Friday, its highest level since January.
The yield on the US 10-year Treasury bill was stable at 1.623 percent. The equivalent German yield on German government bonds was also stable at minus 0.126 percent.
The euro fell 0.3 percent against the dollar to $ 1.2185 as the US currency rebounded after the PMI survey. The dollar index, which measures the dollar against trading partner currencies, was up 0.2 percent at the end of the trading day in New York.
Brent crude, the global oil benchmark, also added to gains from earlier in the session, rising 2.4 percent to $ 66.68 a barrel.
The European Stoxx 600 index rose 0.6 percent in a rally at the end of the session, led by energy stocks.