Published : 3 days ago, on 05/12/2024

By Lawrence Delevingne and Dhara Ranasinghe

BOSTON/LONDON (Reuters) -Bitcoin broke $100,000 on Thursday as investors bet on a friendly U.S. regulatory shift, while world stocks touched fresh record highs with sentiment bolstered by upbeat comments on the economy from Federal Reserve chief Jerome Powell.

France’s government lost a confidence vote late on Wednesday for the first time since 1962, with the far-right and leftist lawmakers joining forces to topple Michel Barnier’s government, but the move had been widely anticipated by investors, so the euro, French stocks and bonds were largely steady on Thursday.

President Emmanuel Macron asked Barnier and his government to stay on in a caretaker capacity until a new prime minister is nominated.

U.S. stocks were little changed in morning trading, a day after all three major U.S. stock indexes scored record closing highs, helped by the comments from Fed Chair Powell.

The Dow Jones Industrial Average fell 0.02%, to 45,006, the S&P 500 rose 0.02%, to 6,087 and the Nasdaq Composite rose 0.10%, to 19,754.

Powell said the economy was stronger than it had appeared in September when the central bank began cutting interest rates, allowing policymakers to potentially be a little more cautious in reducing rates further.

Francois Savary, chief Investment Officer at Genvil Wealth Management, said a fall in U.S. Treasury yields in recent weeks, relatively robust U.S. data and Powell’s latest comments were supporting sentiment in equity markets.

“But there is a risk to the euphoria,” he added.

“Everything is going the right way, right now, but wait for January, (U.S. President-elect Donald) Trump will take power and have to implement economic plans and people will realise that this could have some potential inflationary impact.”

BITCOIN IN THE SUN

It was bitcoin’s day to shine, as the cryptocurrency hit the $100,000 mark and was last trading around 5% higher on the day, near $103,000.

Its latest surge followed Trump saying he would nominate Paul Atkins, who is pro-crypto and pro-deregulation, to run the Securities and Exchange Commission.

“At the end of the day, it’s just a number,” said Geoff Kendrick, global head of digital assets research at Standard Chartered.

But the reality is we’ve been able to get to this level because the industry has become institutionalised this year particularly – and that’s mostly the ETF inflows,” he said, referring to exchange traded funds approved earlier this year.

U.S. rate cut optimism supported sentiment across broader markets.

Over the past week and a half, markets have all but priced in an extra U.S. rate cut for 2025 and the implied chance of a cut in December has lifted from even to around 75%.

Earlier this week, Fed Governor Christopher Waller had said he was leaning towards a cut later in December.

The closely watched U.S. ISM survey showed services sector activity slowed in November after posting big gains in recent months.

Benchmark 10-year Treasury yields edged up after falling the previous day.

With eyes on monthly U.S. employment data on Friday, new data on Thursday showed that the number of Americans filing new applications for unemployment benefits increased moderately last week, suggesting that the labor market continued to steadily cool.

The dollar weakened against major currencies, down about 0.5%, leaving the euro up 0.65% at $1.0578. The yen was little changed versus the dollar.

The risk premium investors demand to hold French debt over German Bunds dropped further away from its highest levels in over 12 years on Thursday after the widely expected government collapse. French stocks rallied to their highest levels in over three weeks <.FCHI>.

A lot of bad news was priced in, it was obvious that we were heading towards the fall of the government,” said Savary of Genvil Wealth Management.

In neighbouring Germany, which is also grappling with political paralysis after its government fell in late November, the DAX blue-chip index rattled to another record high, making it the best-performing major index in Europe this year, with a gain of 21%.

Germany holds elections in February and the hope among investors is for the new government to take measures to stimulate the economy and loosen some rules that cap state borrowing.

Financial markets in South Korea were broadly steady after President Yoon Suk Yeol’s failed attempt to impose martial law late on Tuesday triggered volatility and a political crisis. [.KS]

Oil prices edged higher ahead of an OPEC+ meeting later in the day. The Organization of the Petroleum Exporting Countries and its allies in OPEC+ are likely to extend their latest round of oil production cuts, sources told Reuters.

U.S. crude gained 0.64% to $68.98 a barrel and Brent rose to $72.75 per barrel, up 0.61% on the day. [GOL/]

(Reporting by Lawrence Delevingne in Boston, Dhara Ranasinghe in London and Tom Westbrook in Singapore, Editing by Gareth Jones/Keith Weir)