Crypto slump saps sentiment as Wall St stumbles

Bitcoin extended its decline as the slide in crypto currencies weighed on sentiment for US investors returning from their Thanksgiving holiday and knocking crypto-related companies such as Strategy, Coinbase and Robinhood, with stocks on Wall Street starting the month weaker.

Stock markets declined across the Atlantic, with France’s Airbus tumbling after regulators ordered urgent fixes of disrupted cockpit systems, while defence companies such as Germany’s Rheinmetall and Italy’s Leonardo slid as US and Ukrainian officials said they were making progress over a deal to end the war with Russia.

Oil majors Chevron, Exxon Mobil, Shell and BP rallied as Brent crude prices rose after the Organization of the Petroleum Exporting Countries and its allies decided to leave production steady.

And locally, Australian futures are pointing to a gain across the Tasman when trading opens, while Statistics New Zealand releases September quarter terms of trade figures, and automation systems maker Scott Technology holds its annual meeting in Auckland today.

Back to work

Bitcoin prices extended their declined, dropping 7% to US$84,937 at 7am in Auckland as a hack at the Yearn Finance decentralised finance platform raised fresh concerns about liquidity, amid heightened volatility in broader financial markets.

Wall Street’s volatility index rose 2.3% as investors returned from the Thanksgiving holiday, with the major indices weaker as the S&P 500 slipped 0.2% and the Dow Jones Industrial Average declined 0.4%. The Nasdaq Composite dipped 0.1%.

Crypto stocks were among the hardest hit, with Bitcoin treasury firm Strategy sinking 8.4% after the company cut its outlook and announced plans to set up a US dollar reserve as it grapples with the slide in crypto prices. That comes ahead of Locate Technologies' listing on the NZX on Wednesday.

Crypto exchange Coinbase and trading platform Robinhood were also on the red side of the ledger.

“US equities have started the new month with a soft tone,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “S&P futures declined during Asian trade yesterday, amid a sharp selloff in cryptocurrencies, and the cash market is marginally lower in afternoon US trading.”

Merck & Co and Amgen led the Dow lower in late trading, with pharmaceutical companies broadly weaker as the US Food and Drug Administration said it will tighten vaccine-approval standards. Moderna, Novovax and Pfizer were also among decliners.

Tariff effects

The kiwi dollar traded at 57.37 US cents at 7am in Auckland from 57.36 cents yesterday after the Institute for Supply Management’s manufacturing gauge showed a ninth straight month of shrinking US industrial activity, primarily due to the White House’s tariff regime.

Investors are eyeing a speech from US Federal Reserve chair Jerome Powell, with expectations firm the central bank will cut its key rate later this month.

Stock markets were weaker across the Atlantic, with the UK’s FTSE 100 down 0.2% and France’s CAC 40 declining 0.3%. Germany’s DAX 30 fell 1%.

France’s Airbus dropped 5.6% after regulators ordered urgent fixes for thousands of A320 aircraft to fix cockpit systems that were disrupted by a solar radiation event. The recall disrupted flights in New Zealand over the weekend, with Air New Zealand and Qantas Airways’ Jetstar units back to normal operations.  

Defence companies including Leonardo and Rheinmetall were also weaker as US and Ukrainian officials said they’d made progress in their talks to reach a peace plan to end the war with Russia.

Oil majors were stronger, with Chevron and Exxon Mobil among gainers on the Dow, while Shell and BP both rallied in Europe, after Brent crude futures rose 1.1% to US$63.05 a barrel after OPEC+ agreed to keep production steady.

In the antipodes, Australian future are pointing to a 0.4% gain for the S&P/ASX 200 index when trading opens across the Tasman. Gold futures rose 0.3% to US$4,267 an ounce.

Locally, Stats NZ is due to release the September quarter terms of trade, which show the amount of imports that can be funded by a fixed amount of exports.

And Scott Technology is holding its annual meeting in Auckland today.

Reporting by Paul McBeth. Image from Aleksi Räisä on Unsplash.