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Geopolitics Fire Up Up and Cryptos Are Booming

Geopolitics Fire Up Up and Cryptos Are Booming

Futures in the United States and Europe are trading lower today as investors are worried about the new security agreement between the U.S., the U.K. and Australia. This security pact could flare up tensions further between China and the U.S.

China is not a country that investors like to see being pushed around as it is the second biggest economy in the world. Although, the Biden administration said that the current agreement wasn’t about China. However, it is highly likely that Beijing will reply in some form in the coming days, and this may push traders to buy insurance on their portfolios.

Traders will also be following the U.S. Retail Sales data very closely today, and another dip in this data set fade the rebound for the three major U.S. stock indices. Yesterday, investors were pleased with the New York Fed’s Empire State business conditions index, which came in stronger than expected. Despite economic reports indicating a slowing of the business cycle and economic momentum, economic activity is quite likely to pick up and drive growth forward.

In yesterday’s session, the Dow Jones Industrial Average soared 0.68%, and the S & P 500 index rose 0.85%. The Nasdaq, the tech-savvy index, jumped 0.82%, and the Russell 2000, the small-cap index, hopped 1.11%.

Stock Market

The Empire State business conditions index came in at 34.3 in September, rising nearly 16 points, while the expected reading was 17.2 and the index was 18.3 in August. The surge in the index indicates improving business conditions in the United States.

Investors should understand that major market factors have remained relatively unchanged over the past year. The coronavirus situation, supply chain and labour bottlenecks, uncertain fiscal and monetary policy dynamics, and geopolitical concerns due to the relationship between China and Western countries continue to be major contributors to market volatility. Going forward, investors will continue to monitor these factors to gauge the outlook for economic recovery, considering rising Covid cases and surging consumer prices.

On the other hand, not everything is negative because the global economy is expected to recover at its fastest rate in nearly fifty years, according to the United Nations. Central banks’ injection of liquidity, effective vaccination campaigns by governments, and prudent economic reopening are assisting economic growth in exceeding expectations. However, investors should be aware that the disparity between developed and developing countries is also growing.

Economic Docket

Moving forward, investors should closely monitor today’s unemployment claims data in order to assess the state of the labour force. It is projected that 320,000 Americans applied for unemployment benefits in the week ending September 11. Moreover, the U.S. retail sales data is also due today. Investors should dissect the report to find hints related to the pace of economic recovery and the state of consumer confidence.

Cryptocurrencies

Bitcoin and Ethereum are back on track, and it seems like that the golden cross for Bitcoin on the daily time frame has provided much confidence among crypto traders. It is highly likely that the selloff, or let’s call it a retracement, may be over and we may see another strong rally for Bitcoin.

Traders also need to keep in mind that two major upgrades will be taking place for both top coins in the coming month and they are likely to take the prices to completely new levels if there is success. Firstly, it is the ETH 2.0 upgrade which is really going to make or break Ethereum and finally the Taproot upgrade for Bitcoin network which is likely to take place in November. Taproot network upgrade is the biggest upgrade that the bitcoin network will see since its invention.

Mining Industry

Since Beijing imposed restrictions on the crypto industry, the crypto mining sector has been under intense scrutiny. Since then, transaction fees earned by bitcoin miners have been at an all-time low. Previously, such levels had only been observed at the beginning of the coronavirus pandemic. Block subsidies, on the other hand, are assisting the industry in establishing itself in North America. Miners are essentially compensated in the form of block subsidies for their efforts in verifying the network.

The fee reduction is unlikely to have a substantial impact on the bitcoin expansion prognosis or investment premise. Mining businesses listed in the United States have added around 10,500 BTC in the last year. However, the mining industry will take some time to recuperate and reach its full potential.

Oil

Oil prices jumped nearly $2 on Wednesday after crude oil inventory data showed a larger than forecasted drop and was backed by expectations that demand would grow because of more aggressive vaccination drives. Crude oil inventories dipped by 5.4 million barrels for the week ending September 10 while it was projected that stockpiles would decrease by 3.5 million barrels.

Gold

Gold prices fell yesterday after the precious metal failed to hold above the critical $1,800 level. Despite a lower inflation reading, investors reduced their exposure to gold due to the expectation that the central bank will begin tapering this year. The strong New York manufacturing reports from yesterday boosted investor confidence and risk appetite for riskier assets. Traders should note that the price of gold is likely to be volatile in the run-up to next week’s Fed meeting.

Asian Markets

Investors should be aware that Chinese regulators have recently turned their attention to the gambling industry. Controls on operators will be strengthened, according to reports, and formal government officials will be appointed to oversee businesses in Macau. As a result, gambling companies on Wednesday reported a combined loss of $18.4 billion.

In addition, Western countries are attempting to resist Beijing’s growing influence. In the most recent development, Australia is collaborating with the United Kingdom and the United States to expand its nuclear submarine arsenal.

As of 11:40 p.m. EST, the Nikkei declined 0.59%, while the Shanghai Composite Index fell 0.61%. The ASX 200 index surged 0.84%, and Seoul’s Kospi dropped 0.55%. The Hang Seng index, in Hong Kong, slumped 1.35%.