Ankur Banerjee provides insights into the day ahead in European and global markets:
After much anticipation, the approval of exchange-traded funds (ETFs) to track bitcoin by prominent entities such as BlackRock, Ark Investments/21Shares, Fidelity, and Invesco has finally arrived. The U.S. Securities and Exchange Commission gave the green light to 11 applications, igniting celebrations in the crypto world over what is perceived as a game-changing development.
These ETFs, expected to commence trading on Thursday, open the door to a wider investor base. Estimates of first-year inflows vary significantly, ranging from $5 billion to $100 billion. However, the true acceptance of the famously volatile cryptocurrency within a larger investor community remains uncertain.
Despite the official approval, Bitcoin showed minimal changes in Asian trading hours, settling at $46,337. The cryptocurrency had already surged by 70% since mid-October in anticipation of the U.S. regulatory decision.
In the broader market, investors are gearing up for the U.S. inflation report later in the day, a crucial factor that could influence the Federal Reserve’s stance on potential rate cuts in the upcoming year. Despite a reassessment by traders, who are now pricing in 140 basis points of rate cuts in 2024, the report will provide insights into whether inflation is aligning with the Fed’s 2% target.
Currency markets displayed a lack of decisive trends, with the Japanese yen recovering some overnight losses against the dollar, settling at 145.36. Meanwhile, in equities, the Nikkei continued its strong performance, surpassing 35,000 for the first time in almost 34 years, setting a positive tone for the best-performing Asian bourse in 2023.
Looking ahead, futures suggest a continuation of the positive sentiment in European markets, with limited economic data on the docket for the region. Key economic events for Thursday include CPI data for Portugal, Netherlands, and the U.S.
