US and European stock futures are trading flat while investors are hoping that worse is over when it comes to the banking crisis in Europe and the US. However, we believe that traders should continue to practise caution and should keep a close eye on the CDS for banks in Europe and the US. For now, the volatility index has taken another nose dive, but if we stop keeping our finger on the pulse, things can deteriorate fairly rapidly. This is because what matters most is the monetary policy adopted by the Fed and the ECB. So far, we have not seen any significant shift in that, and what the policyholders believe and what the market players anticipate are quite distant. This means that one of these two factors will have a reality check, which is bound to bring a shock for the equity markets—of course, that shock could be a positive one, especially if policyholders throw in the towel with respect to price stability.
Stock Market
For now, the UK’s FTSE 100 index is expected to open higher by 22 points, the German DAX index is expected to open nearly 49 points higher, and France’s CAC 40 index is also pointing to a higher open by 28 points.
Overnight on Wall Street, we also saw a positive session for the US stock indices, which is helping the US futures today. The Dow Jones Industrial Average scored a gain of 0.6%, and the S&P 500 jumped higher by 0.2%, while the Nasdaq index finished the day in negative territory and declined by 0.5%.
Cryptos
Cryptos are very much in focus today after the SEC sued the CEO of the biggest crypto exchange, Binance. For many, this particular event was long coming, as Binance was mostly closing its doors to US investors. But we are optimistic about the SEC’s action, as this is only going to encourage more players to play by the book, which should boost confidence among institutional traders. It’s crucial to keep in mind that Binance is not Bitcoin, and that the SEC’s lawsuit against Binance does not portend the demise of the entire crypto industry, particularly Bitcoin. Regulators are doing something that they should have done a while back, and that is encouraging only those players who play by the book and providing protection to consumers, who are mostly left holding the bag.
As the Fed is getting caught off guard, the current drop in Bitcoin prices is a chance for traders. The chances are that the Fed will have to ease off of its hawkish monetary policy, and that is only going to bring more buyers for the BTC. In addition, the US banking system has suffered a massive setback, which has led many to think that bitcoin is the answer to many of the issues that banking systems have.
Gold
The precious metal continues to trade lower; however, today we have seen some green, which means some buyers are returning to the market. The sell-off in the past few days has brought buyers back into the market, while gold traders know that the main event that is going to move the needle will be the US NFP data, which is due next month. Having said that, traders are keeping close tabs on all the US economic data, and today’s US Consumer Confidence number, which is going to be released at 15:00 BST, is likely to bring higher volatility for the metal. Consumer confidence is expected to drop, which would force the Fed to stop raising the interest rate.
