Stocks struggle after bumper week, bitcoin plunges

FRANKFURT: A display showing the German Stock Market Index DAX is pictured at the stock exchange in Frankfurt, Germany. – AFP

LONDON: Equities mostly dropped yesterday after last week’s strong showing, while bitcoin plunged 20 percent as volatile trading returned to markets. The dollar climbed, while oil prices declined, also after big gains last week. “It was a strong run-up last week so we are likely just seeing a little pause for breath,” noted Neil Wilson, chief market analyst at

“Looking ahead this week we are focused on the start of the fourth-quarter earnings season on Wall Street.” Bitcoin was the standout, losing a fifth of its value from Sunday to $32,388, before going back up to above $35,000. The cryptocurrency last week smashed record after record, eventually surging past $40,000.

With small investors at risk of big losses amid the volatility that saw bitcoin rocket by one third in value last week, Britain’s financial watchdog on Monday urged caution. The Financial Conduct Authority “is aware that some firms are offering investments in cryptoassets, or lending or investments linked to cryptoassets, that promise high returns”, it said in a statement.

“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. “If consumers invest in these types of product, they should be prepared to lose all their money,” the FCA added. Wall Street closed out last week with more record-highs, with investors broadly upbeat on the prospect of a further massive stimulus for the US economy.

“After being bullish for several months, we are definitely becoming more cautious on the stock market up at these levels,” said Matt Maley, at Miller Tabak + Co. Gains last week were driven by US stimulus hopes and as countries begin rolling out coronavirus vaccines, helping to offset surging cases of the disease that has trigged fresh lockdowns worldwide.

With the economy decimated by COVID-19, President-elect Joe Biden has called for a spending spree in the trillions of dollars. The need for more financial help for the world’s top economy was laid out Friday with US data showing 140,000 people lost their jobs in December-the first fall since April-as virus infections and deaths surged across the country. The spending pledge by Biden, who will be sworn in as president on January 20, comes alongside Federal Reserve financial support and record low rates for the foreseeable future. – AFP

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