Bitcoin Futures In The Spotlight, Driving Stocks Up

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World stocks rose, while equity volatility approached a record low on Monday as investors concentrated on solid economic growth prior to the interest rate decisions. The launch of bitcoin futures supported the market’s cryptocurrency mania.

European stocks pulled force from a positive Asian session during premarket trading. After the open, the rally ended but Germany’s DAX held onto gains.
Strong banks and mining stocks supported benchmarks, and Britain’s FTSE rose by 0.7 percent.

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The debut of bitcoin futures contracts was in the spotlight, permitting investors to bid on the price of the cryptocurrency in one, two or three months. The one-month contract, the most-traded on the CBOE Global Markets exchange opened on Sunday night at $15,850, a 21 percent gain. It was last quoted at $17,500, after previously trading at $18,850. Bitcoin has gained over 1,600 percent this year, adding to the concern that it is a bubble is forming.

“The one-month contract is trading at around an 11 percent premium to the underlying bitcoin, and for me that’s a clear indication that there’s no connection between the two markets,” said Lukas Daalder, a chief investment officer.

Daalder added, “I can understand you don’t see that many people who are willing to offer this contract, because you can’t hedge your underlying risk if you can’t short it. This only adds to the bitcoin phenomenon. It’s interesting to watch, but not a market that I would like to touch”.


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World stocks gained coming close to their most recent highs, driven by more benign Asian trading following Friday’s strong U.S. employment data. Global stocks increased 0.2 percent to 505.31, almost touching last week’s record of 507.09.

“Momentum behind stock markets has been pretty solid, supported in part by good numbers on the economic front and not bad earnings. I don’t see anything happening right now that could break the momentum,” said Daalder.

Currency and bond markets were hesitant prior to the week’s global policy meetings, though the Federal Reserve is the only major central bank anticipated to hike up interest rates.

“Global growth has strengthened but there is very little evidence yet that inflation pressures are picking up, which continues to favor only a gradual pace of monetary policy normalization,” Lee Hardman, strategist.

Sterling steadied at $1.3383. The dollar index dropped 0.2 percent to 93.75, still hovering near a three-week high after five straight sessions of gains. Most high-grade euro zone bond yields dipping, with 10-year Bund yields, sliding below 0.30 percent.

“Bonds have drifted lower in recent weeks,” said Daalder. “I would say there’s some complacency for sure, but I don’t see any major moves until the New Year.”

The gap between U.S. and German bond yields came close to its farthest since April since the two central banks separated.

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