European stocks and US futures dropped Wednesday, pressured by growing geopolitical concerns and a disappointing revenue forecast from Nvidia Corp., which dampened investor enthusiasm for tech stocks. Meanwhile, Bitcoin surged toward the $100,000 mark, while oil and gold prices climbed as fears of a further escalation in the Russia-Ukraine war intensified.
The Stoxx Europe 600 index struggled, with futures on the S&P 500 and major Asian indices also falling after Nvidia failed to meet high market expectations. Nvidia’s weaker outlook weighed on technology stocks, which had previously been buoyed by strong performance in 2023.
Adding to market unease, oil prices surged to session highs and gold also saw gains as news broke that Russia had launched an intercontinental ballistic missile during an overnight assault on Ukraine. This development raised concerns over the potential for a further escalation in the ongoing conflict, putting investors on edge.
Treasury yields eased slightly ahead of the release of initial jobless claims data in the US, with market participants also awaiting the announcement of President-elect Donald Trump’s Treasury secretary pick. The US dollar index fell after rising earlier in the week.
“Trump’s win has brought with it an increase in geopolitical uncertainty, and that too is weighing on sentiment,” said Daniel Murray, CEO of EFG Asset Management in Zurich. “Ukraine now has an incentive to gain as much strategic advantage as possible ahead of Trump’s inauguration.”
In the US, Federal Reserve Bank of Boston President Susan Collins called for additional interest rate cuts, but cautioned that policymakers should be careful not to move too hastily. The swaps market showed a less than 50% chance of a rate cut by the Fed in December.
Bitcoin Hits Record Highs Amid Policy Discussions
Bitcoin reached a new all-time high, climbing to $97,000, driven by ongoing discussions within Trump’s transition team about potentially creating a White House position focused on cryptocurrency policy.
In Asia, the Adani Group faced significant setbacks as shares of its units tumbled and the conglomerate abandoned a $600 million bond sale. US prosecutors charged Adani’s founder, Gautam Adani, with allegedly orchestrating a scheme to pay over $250 million in bribes to Indian officials for solar energy contracts. The Adani Group has denied these allegations.
The Japanese yen strengthened by 0.6% against the dollar after comments from Bank of Japan Governor Kazuo Ueda, who said the central bank was closely monitoring the impact of foreign exchange movements on the economy and inflation.
Key Economic Data Ahead
Several key economic indicators are set to be released later this week, including:
- Eurozone consumer confidence on Thursday
- US existing home sales, initial jobless claims, and Philadelphia Fed factory index on Thursday
- Eurozone HCOB Manufacturing & Services PMI on Friday
- US University of Michigan consumer sentiment and S&P Global Manufacturing & Services PMI on Friday
Market Moves:
Stocks:
- Stoxx Europe 600: -0.1%
- S&P 500 futures: -0.3%
- Nasdaq 100 futures: -0.5%
- MSCI Asia Pacific Index: -0.4%
- MSCI Emerging Markets Index: -0.6%
Currencies:
- Bloomberg Dollar Spot Index: -0.1%
- Euro: $1.0538 (unchanged)
- Japanese Yen: 154.77 per dollar (+0.4%)
- Offshore Yuan: 7.2439 per dollar (unchanged)
- British Pound: $1.2643 (unchanged)
Cryptocurrencies:
- Bitcoin: $97,012 (+2.7%)
- Ether: $3,135.59 (+1.8%)
Bonds:
- 10-year US Treasury yield: 4.41% (unchanged)
- 10-year German bond yield: 2.36% (+1 basis point)
- 10-year UK bond yield: 4.46% (unchanged)
Commodities:
- Brent Crude: $73.50 per barrel (+0.9%)
- Spot Gold: $2,663.64 per ounce (+0.5%)
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