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European Shares Seen Lower As Inflation Worries Mount

European stocks are seen opening lower on Wednesday as investors fret about rising inflation and ponder over the outlook on interest rates.

The focus is on U.S. consumer price inflation data due out later in the day that could test the Fed’s stance on rate hikes.

San Francisco Fed President Mary Daly on Tuesday said it will be mid-2022 before there is clarity on the true state of the labor market and the outlook for inflation.

Separately, St. Louis Fed President James Bullard told CNBC that he’s currently expecting the U.S. central bank to hike its benchmark rate twice in 2022.

Data showed earlier today that China’s factory-gate prices grew at the fastest pace in 26 years in October due to imported inflation and tight domestic supply of major energy and raw materials.

Consumer inflation rose an annual 1.5 percent in the month, quickening from September’s 0.7 percent rise due to factors such as weather conditions, tight supply of some goods and rising costs.

Asian markets fell broadly, with Chinese and Hong Kong markets leading regional losses on concerns about liquidity woes spreading in China’s property sector.

Shares of Fantasia Holdings Group plunged by nearly half to a record low in Hong Kong at one point after the debt-laden Chinese developer defaulted on a U.S. dollar bond and further warned there is no guarantee it could meet other financial obligations.

Meanwhile, China Evergrande Group is due to make coupon payments totaling US$148.1m by today U.S. time. Failure to make payment would be a default. Gold retreated from a more than two-month high as the dollar strengthened amid escalating inflation concerns.

Oil extended overnight gains after industry data showed a surprise decline in U.S. crude stocks last week. Bitcoin held around $67,000, not far from the record high.

U.S. stocks slipped from record levels overnight as Treasuries surged, Bitcoin hit new records and data showed producer prices increased solidly in October, suggesting that high inflation could persist for a while.

The S&P 500 gave up 0.4 percent to snap an eight-day winning streak and the tech-heavy Nasdaq Composite shed 0.6 percent to snap an 11-day winning run, while the Dow eased 0.3 percent.

European stocks also retreated from a record high Tuesday amid concerns surrounding inflation and Evergrande.

The pan European Stoxx 600 fell 0.2 percent. The German DAX and France’s CAC 40 index both finished marginally lower, while the U.K.’s FTSE 100 declined 0.4 percent.

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Cryptocurrency scams using ATMs and QR codes are on the rise.

  • The FBI is warning of a rise in crypto scams using ATMs and QR codes.
  • Using a fake request for payment, scammers direct victims to a crypto ATM to withdraw coins.
  • The criminals give victims a QR code associated with a cryptocurrency wallet to send crypto to.

The FBI warned Friday that criminals are increasingly using cryptocurrency ATMs and QR codes to trick people into handing over their money.

Such schemes often begin with a fraudulent request for funds. Scammers may pretend to be from a government agency seeking money or a from a lottery that requires a fee before a prize can be claimed, according to the FBI.

The criminals then send the victims to a physical cryptocurrency ATM to buy coins. After the purchase, the victims use a QR code associated with the scammer’s crypto wallet to transfer the funds.

Once the payment goes through, the criminals often transfer the funds to an overseas account immediately, the FBI said. This can make recovering the funds difficult, since traditional bank transfers can remain pending for one to two days before settlement.

The FBI is advising people to be cautious whenever someone says they can only accept cryptocurrency and to avoid cryptocurrency ATMs that advertise anonymity and only require a phone number or e-mail.

The agency’s warning comes at a time when cryptocurrency scams are soaring. A report from a crypto research firm in August said that scams involving crypto are on track for a record in 2021, and have been increasing by about 41% every year.

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Gold Prices Extend Rally Despite Strong Jobs Data

Gold prices moved sharply higher during trading on Friday, extending the substantial move to the upside seen in the previous session.

After jumping $29.60 or 1.7 percent to $1,793.50 an ounce on Thursday, gold for December delivery surged $23.30 or 1.3 percent to $1,816.80 an ounce.

The continued increase by the price of gold came despite the released of upbeat jobs data, as the strong job growth is still not expected to convince the Federal Reserve to hurry to raise interest rates.

The Labor Department said non-farm payroll employment surged up by 531,000 jobs in October after climbing by an upwardly revised 312,000 jobs in September.

Economists had expected employment to jump by 425,000 jobs compared to the addition of 194,000 jobs originally reported for the previous month.

With employment increasing by more than expected, the unemployment rate fell to 4.6 percent in October from 4.8 percent in September, hitting its lowest level since March of 2020. The unemployment rate was expected to edge down to 4.7 percent.

The Labor Department described the job growth as widespread, with notable job gains in leisure and hospitality, professional and business services, manufacturing, and transportation and warehousing.

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U.S. Stocks Reach New Record Highs On Upbeat Jobs Data

Stocks fluctuated after an early move to the upside during trading on Friday but managed to remain mostly positive throughout the session. The major averages extended a recent upward trend, reaching new record closing highs.

The major averages all finished the day in positive territory. The Dow climbed 203.72 points or 0.6 percent to 36,327.95, the Nasdaq edged up 31.28 points or 0.2 percent to 15,971.59 and the S&P 500 rose 17.47 points or 0.4 percent to 4,697.53.

For the week, the tech-heavy Nasdaq spiked by 3.1 percent, the S&P 500 surged up by 2 percent and the Dow jumped by 1.4 percent.

The continued strength on Wall Street came after the Labor Department released a report showing U.S. employment increased by more than expected in the month of October.

The report said non-farm payroll employment surged up by 531,000 jobs in October after climbing by an upwardly revised 312,000 jobs in September.

Economists had expected employment to jump by 425,000 jobs compared to the addition of 194,000 jobs originally reported for the previous month.

With employment increasing by more than expected, the unemployment rate fell to 4.6 percent in October from 4.8 percent in September, hitting its lowest level since March of 2020. The unemployment rate was expected to edge down to 4.7 percent.

The Labor Department described the job growth as widespread, with notable job gains in leisure and hospitality, professional and business services, manufacturing, and transportation and warehousing.

The upbeat jobs data added to optimism about the outlook for the economy despite lingering concerns about supply chain issues and rising inflation.

Stocks also continued to benefit from recent upward momentum, which has lifted the major averages to record highs on largely upbeat earnings news.

Signals the Federal Reserve is not in a hurry to raise interests also continued to generate buying interest even as the central bank begins scaling back its asset purchases.

Sector News

Gold stocks moved sharply higher over the course of the trading session, driving the NYSE Arca Gold Bugs Index up by 3.2 percent.

The rally by gold stocks came as the price of the precious extended the spike seen in the previous session, with gold for December delivery jumping $23.30 to $1,816.80 an ounce.

Significant strength was also visible among housing stocks, as reflected by the 1.8 percent gain posted by the Philadelphia Housing Sector Index. The index ended the session at its best closing level in two months.

Oil, natural gas, and semiconductor stocks also saw notable strength on the day, while biotechnology stocks showed a substantial move to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index fell by 0.6 percent, while China’s Shanghai Composite Index slumped by 1 percent.

Meanwhile, the major European markets moved to the upside on the day. While the French CAC 40 Index advanced by 0.8 percent, the U.K.’s FTSE 100 Index rose by 0.3 percent and the German DAX Index edged up by 0.2 percent.

In the bond market, treasuries moved notably higher, extending the advance seen over the course of the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.1 basis points to 1.453 percent.

Looking Ahead

Following the major economic events seen over the past week, next week’s trading may be impacted by reaction to reports on producer and consumer prices and consumer sentiment.

Earnings news may also continue to attract attention, with a number of well-known companies due to report their quarterly results.