By Peter Nurse
Investing.com — Federal Reserve speakers continue to comment on monetary policy, Hong Kong’s ‘Apple Daily’ pro-democracy newspaper closes under Chinese government pressure, Bitcoin rebounds above $30,000, PMI numbers and U.S. crude inventories. Here’s what’s moving markets on Wednesday, June 23rd.
1. Fedspeak continues
These speakers will all attract the attention of the market after Federal Reserve Chair Jerome Powell testified Tuesday in front of U.S. lawmakers on Capitol Hill, playing down concerns about rising prices, maintaining his view that the country’s surging inflation would be transitory.
Additionally, New York Fed president John Williams, one of the more influential members of the Fed’s rate-setting committee, stated that more progress is needed before the Fed begins to scale back its bond buying.
This has calmed nerves that were rattled last week after Fed officials brought forward their expectations of when the central bank will need to increase interest rates to stop the U.S. economy overheating.
Globally, monetary policy is still facing mixed conditions, with the Thai central bank lowering its growth outlook due to weak incoming tourism. However, in Europe, the Czech National Bank is expected to follow the National Bank of Hungary, which on Tuesday became the first central bank in the European Union to lift interest rates since the pandemic began..
2. Stocks higher ahead of PMI data
U.S. stocks are seen opening moderately higher Wednesday, continuing to benefit from Fed Chair Powell’s downplaying of the risk of an early move to tighter monetary policy.
The main equity indices closed higher Tuesday, with the blue-chip Dow Jones Industrial Average gaining nearly 0.2%, the broad-based S&P 500 rising 0.5% and the tech-heavy Nasdaq Composite outperforming, climbing 0.8%, for a new record close.
The data slate centres around the release of the June U.S. PMI numbers, with the releases set to confirm a strongly recovering economy.
The equivalent numbers in Europe earlier Wednesday showed Eurozone business growth accelerated at its fastest pace in 15 years this month, helped by reopening that boosted the region’s dominant services sector.
3. Apple (NASDAQ:AAPL) Daily to close in Hong Kong
Hong Kong’s pro-democracy Apple Daily newspaper is set to close at the end of this week, after concerted pressure by the authorities on the paper and its owner Jimmy Lai.
Some 500 Hong Kong police raided the paper’s offices, the first case in which authorities have cited media articles as potentially violating a new national security law that drew intense criticism from the U.S. earlier this year.
China has been steadily tightening its grip on Hong Kong over the last few years, in violation of a 1984 agreement to honour Hong Kong’s autonomy. That move prompted U.S. lawmakers to impose sanctions, penalizing banks that do business with Chinese officials.
4. Bitcoin still volatile as headwinds strengthen
Bitcoin, the largest cryptocurrency by market capitalization, rebounded back above $30,000 on the back of dovish comments from Federal Reserve members, shrugging off a crackdown by South Korean authorities on people using crypto accounts to evade taxes.
At 6:20 AM ET, Bitcoin traded 7.2% higher at $34,066, after falling below $30,000 on Tuesday for the first time since January. It’s still some way below April’s all-time high just below $65,000.
Bitcoin bulls are still struggling with a separate crackdown on mining operations by China, where around 65% of bitcoin miners operate.
A “seismic mining shift” is taking place in China, according to a recent report by Glassnode, a blockchain analytics firm, with many miners in the process of either shutting down or migrating their hashing power outside of China to comply with the mining ban.
In a JPMorgan (NYSE:JPM) survey, published on Tuesday, one in three investors who responded to a survey deemed crypto “rat poison,” while an additional 16% called it a “temporary fad.”
“Four in five (81%) investors expected tighter regulations of crypto with almost all (95%) believing fraud is somewhat or very much prevalent in [the] crypto world,” the report said.
5. Crude higher as U.S. inventories plummet
Crude oil prices pushed to multi-year highs, after strong demand in the U.S. market drained the country’s inventories.
By 6:20 AM ET, U.S. crude was up 0.9% at $73.47 a barrel, a level not seen since September 2018, while Brent was up 1% at $75.57, after pushing above $75 a barrel during the previous session for the first time since April 2019.
U.S. inventories numbers from the trade body, the American Petroleum Institute showed a draw of 7.2 million barrels, continuing a run of large reductions as demand rises in response to a brightening travel season.
Official numbers from the U.S. Energy Information Administration are due at 10:30 AM ET, with expectations for a fifth straight decline in crude stocks.