Record-Breaking Prices for Bitcoin and Gold
Bitcoin and gold prices reached new milestones on Sunday and Monday, driven by increasing financial uncertainty tied to the US government shutdown. This situation was further complicated by a fresh political crisis in France. The events have significantly impacted global markets, with investors seeking safer assets amid the turbulence.
French Prime Minister Sébastien Lecornu resigned shortly after his appointment, causing instability in European markets. His resignation came amid disputes over budget and cabinet matters, which led to a decline in French stocks and an increase in bond yields. This development has raised concerns among investors about the economic outlook in Europe’s second-largest economy.
Gold prices were approaching $4,000 per ounce at the start of the week, fueled by expectations of further rate cuts by the US Federal Reserve. However, the price dropped slightly below $3,970 around 10:00 CEST on Tuesday. Since the beginning of the year, when gold was priced at $2,669, its value has steadily increased. This rise is partly attributed to increased central-bank demand and geopolitical tensions that push investors toward inflation hedges. A weaker dollar has also contributed to the price surge, as it makes gold more affordable for holders of other currencies.
Bitcoin, often referred to as digital gold, saw a significant surge, surpassing $125,000 on Sunday and reaching a new record on Monday. The world’s largest cryptocurrency has gained over 30% this year, supported by the US administration’s crypto-friendly policies and concerns about the depreciation of the dollar. Despite this impressive growth, the enthusiasm surrounding Bitcoin may not be long-lasting.
Thibault Desachy, team lead at AM Invest & Wealth Management at Coinhouse, expressed caution regarding the current market conditions. He stated, “We (Coinhouse) remain convinced that we are approaching the end of a cycle and that caution is warranted. It is advisable to adopt a more trading-oriented stance than an investment-oriented one in order to avoid getting caught up in a bear market.”
European Markets React to French Political Turmoil
European stock indexes experienced fluctuations in response to the French political crisis. Most leading European stock indexes initially declined, as the unexpected resignation of Prime Minister Lecornu affected investor sentiment. The drop in French stocks was accompanied by an increase in bond yields.
At around 11:00 CEST, the FTSE 100 in London showed a slight increase, while the CAC 40 in Paris fell by more than 0.2%, the DAX in Frankfurt decreased by 0.1%, and the IBEX 35 in Madrid remained largely unchanged. The benchmark STOXX 600 index was relatively stable. Losses in healthcare and industrial companies, such as Germany’s Bayer and Denmark’s Novo Nordisk, were partially offset by gains in luxury and energy sectors, including shares of LVMH, Kering, and Shell.
By midday, most European indexes had recovered slightly into positive territory. In the commodities market, Brent crude oil lost nearly 0.5% and was traded at $65.12 per barrel, while WTI crude was slightly lower at around $61.40 per barrel.
US Markets Weather Government Shutdown
Despite the ongoing US government shutdown, US markets have shown resilience. Wall Street trade was influenced by company announcements on Monday, with the AI boom boosting tech stocks and increasing the market value of major technology firms. However, the broader state of the US economy remains uncertain due to the shutdown, which has delayed data releases.
On Monday, the S&P 500 climbed 0.4% to reach an all-time high of 6,740.28. The Dow Jones Industrial Average increased by 0.1% to 46,694.97, while the Nasdaq composite rose 0.7% to set a new record at 22,941.67.
In currency trading on Tuesday morning, the US dollar strengthened against the Japanese yen, rising to 150.49 from 150.35 yen. The euro was priced at $1.1695, down from $1.1714. These movements reflect the dynamic nature of global financial markets amid ongoing uncertainties.
