An explosion in central New York pushed the dollar lower yesterday, but stock markets recovered after an early dip, once it became clear the situation had been contained.
The S&P 500, Dow Jones and Nasdaq indexes rose 0.1 to 0.3 per cent when the main US stock markets opened two and a half hours later.
The dollar slipped as far as 113.245 yen against the Japanese currency. The Swiss franc, a refuge at times of heightened risk, reached a high of 1.16755 francs per euro.
Before the news from New York, European markets were quiet, with the spotlight instead on new bitcoin futures, which were feeding traders’ cryptocurrency obsession.
A positive Asian stocks session had helped Europe initially. The rally dissipated, but a fall in sterling and a rebound by mining shares kept London’s FTSE 0.5 per cent higher. Germany’s cyclicals-heavy DAX also held its ground.
But the spotlight yesterday was on the debut of Bitcoin futures contracts, which allow investors to bet on the price of the cryptocurrency in one, two or three months.
The one-month contract, the most-traded on the Chicago-based CBOE Global Markets exchange, opened at $15,850 on Sunday night – a gain of 21 per cent.
Yesterday, it was last quoted at $17,850, having earlier traded as high as $18,850.
Bitcoin itself hovered at just under $16,000.
Bitcoin has rocketed up 1,600 per cent since the start of the year, attracting institutional interest – and concern that it is a bubble in the making.
Currency and bond markets were cautious ahead of a big week of policy meetings, although the Federal Reserve is the only major central bank expected to raise interest rates.
The Bank of England and the European Central Bank are widely seen holding rates steady. Sterling stabilised, edging lower after a volatile week, last at $1.3383.
The dollar index, which measures the greenback against a basket of currencies, eased 0.2 per cent to 93.75, still hovering near a three-week high after five straight sessions of gains.
Sluggish US wage growth and inflation have sparked some concern over rate rises, and traders will zoom in on the Fed’s future rate projections tomorrow.
Most high-grade euro zone bond yields were a tad lower, with 10-year Bund yields, the benchmark for the region, dropping below 0.30 per cent.
In commodities, signs of increased drilling activity after the latest rise in the US rig count dampened oil prices.
US crude fell to $56.91 a barrel before recovering to trade flat at $57.26, and Brent crude inched up to $63.47, holding near a recent two-and-a-half year peak of $64.65.
Spot gold was firmer at $1,250.81 an ounce. Copper prices gained for a fourth straight session having fallen sharply early last week.