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Stocks Rise While China’s Crackdown Roils Crypto: Markets Wrap

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·3 min read
Stocks Rise While China’s Crackdown Roils Crypto: Markets Wrap
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(Bloomberg) -- For all the turmoil in global markets earlier in the week, stocks managed to stay in the green. Traders shrugged off concerns over a Federal Reserve pullback in stimulus, contagion risks from distressed developer China Evergrande Group and Beijing’s latest crackdown on cryptocurrencies.

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After fluctuating throughout most of the session, the S&P 500 staged a late-day rebound and notched a weekly advance. Energy and financial companies were among the biggest gainers Friday. Bitcoin tumbled alongside crypto-related shares like Riot Blockchain Inc. and Marathon Digital Holdings Inc. The Nasdaq Golden Dragon China Index -- which tracks some of the Asian nation’s largest firms listed in the U.S. -- sank.

“This week promised to be lively and it didn’t disappoint,” wrote Craig Erlam, senior market analyst at Oanda. “Buy the dip is alive, and well it seems because the end result is that Evergrande remains at risk, central banks will soon be tightening and are increasingly concerned that inflation may not be quite as transitory as previously thought.”

In another blow to market sentiment, China said crypto-related transactions will now be considered illicit financial activity. Investors remained on guard for what the country’s regulators may target next as the government also tightens its grip on sectors ranging from private education to digital gaming, e-cigarettes, property and insurance.

Traders pulled $28.6 billion from U.S. equity funds in the week through Sept. 22 -- the most since February 2018, according to a Bank of America Corp. note, which cited EPFR Global data. Even after the massive outflow, BofA private clients remained heavily exposed to stocks, with about 65% of assets under management invested in the category.

Read: Powell Hears Americans’ Laments on Job-Market Woes, Supply Chain

The U.S. economy has met the central bank’s conditions for starting to reduce its asset purchases soon, according to two regional Fed bank presidents.

“I support starting to dial back our purchases in November and concluding them over the first half of next year,” Fed Bank of Cleveland President Loretta Mester noted. Separately, her Kansas City counterpart Esther George said “the criteria for substantial further progress have been met,” referring to the central bank’s taper test.

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

  • The S&P 500 rose 0.15% as of 4 p.m. New York time

  • The Nasdaq 100 was little changed

  • The Dow Jones Industrial Average was little changed

  • The MSCI World index fell 0.1%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.3%

  • The euro fell 0.2% to $1.1719

  • The British pound fell 0.3% to $1.3672

  • The Japanese yen fell 0.4% to 110.76 per dollar

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 1.45%

  • Germany’s 10-year yield advanced three basis points to -0.23%

  • Britain’s 10-year yield advanced two basis points to 0.92%

Commodities

  • West Texas Intermediate crude rose 0.9% to $73.96 a barrel

  • Gold futures fell 0.1% to $1,747.70 an ounce

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