Written by Kevin Buckland and Lawrence White
TOKYO/LONDON (Reuters) – Stock markets fell on Tuesday, but the dollar held steady. Investors are awaiting minutes from the Federal Reserve's latest policy meeting to gauge the likelihood and size of interest rate cuts this year.
Gold prices, although down from Monday's all-time highs, fell on concerns that U.S. interest rates will remain high as Federal Reserve officials remain cautious about their recent easing of inflation.
Cryptocurrencies Ether and Bitcoin rose to six-week highs amid speculation that the U.S. Securities and Exchange Commission (SEC) would approve a Spot Ether ETF.
Markets are currently pricing in about 41 basis points of Fed rate cuts this year, with a quarter-point cut in November fully priced in.
Traders scrambled to rebuild bets on easing after data earlier this month showed consumer price pressures eased in April after an unexpected rise in the first three months of the year. .
Still, Fed officials have been reluctant to declare the fight against inflation over, with Vice Chairman Philip Jefferson saying Monday it was too early to tell whether the economic slowdown would be “prolonged,” and Michael・Vice Chairman Barr said that more time is needed for restrictive policies.
Minutes from the Fed's last meeting, scheduled for Wednesday, could provide valuable insight into future policy direction, but this deliberation predates last week's weak CPI numbers.
Europe's benchmark STOXX index of 600 stocks fell 0.3%, following a 0.9% decline in the broadest MSCI index of Asia-Pacific stocks outside Japan.
U.S. markets looked set to continue this subdued market, with Nasdaq futures down 0.08%, while the U.S. market was flat after rising 0.1% on Monday.
“Market sentiment remains relatively strong, with implied volatility low, supported by growing confidence that the U.S. will cut interest rates this year,” Kyle Rodda, senior market analyst at Capital.com, said in a note. said.
At the same time, prices for metals such as gold have hit record highs, which have been cited as a sign that economic activity is improving worldwide, which is a factor in stagnating inflation. “It's possible,” Rodda said.
Gold fell 0.3% to about $2,417 an ounce after rising to a peak of $2,450 for the first time overnight.
The dollar held firm against its major peers, flat at $104.62, after rebounding from a five-week low of $104.07 hit on Thursday.
It was little changed at 4.4355% after rising 1.7 basis points on Monday.
Futures fell 0.8% to $83.04 per barrel, while U.S. West Texas Intermediate crude oil (WTI) fell 0.7% to $79.16.
Meanwhile, traders have been buying up cryptocurrencies after reports that the SEC suddenly required exchanges that want to trade Ethereum ETFs to update their regulatory documents, raising expectations that approval will be granted this week.
rose to $71,957, and Ethereum rose to $3,720.80, both levels not seen since April 9.
IG analyst Tony Sycamore said: “Speculation surrounding the Ether ETF certainly played a role in this move, adding fuel to the crypto bull market that reignited after last week’s cooling in US CPI data.” said.
Sycamore expects Bitcoin to retest its all-time high of $73,803.25 in the near future, before heading towards $80,000.
