ASX to fall as Nasdaq hits record high, while bitcoin faces risk of tougher regulation in the US

Australian shares are expected to open lower as US tech stocks drive the Nasdaq to climb to its highest level ever.

But Wall Street’s other major indices, the Dow Jones and S&P 500, were flat.

Foreign investors are betting the new President of the United States, Joe Biden, and central banks will introduce a multi-million dollar stimulus this year to cushion the damage of the pandemic and boost economic growth.

ASX futures were down 16 points (-0.2pc) to 6,756, by 8:20 am AEDT.

The Australian dollar was slightly stronger (+ 0.2pc) at 77.63 US cents.

But the local currency (-0.4pc) slipped to 63.8 cents euros after the European Central Bank held its monthly policy meeting.

The ECB kept its deposit rate unchanged at -0.5 percent, and maintained the overall quota for bond purchases at $ 2.9 trillion (1.85 trillion euros), as expected.

Meanwhile, the Office of Statistics (ABS) will release its preliminary estimate of December retail figures at 11:30 am AEDT, which includes Christmas and Boxing Day sales.

Retail trade is likely to have fallen (-7pc) in December, compared to the previous month, said Commonwealth Bank currency strategist Joseph Capurso.

But on that forecast, retail spending would still have risen 6.2 percent over the past year.

Bitcoin (-8.3pc) fell to $ US32,137, around its lowest value in 1.5 weeks, as traders feared the prospect of tougher U.S. regulations on cryptocurrencies.

Brent crude oil was flat at $ US56.07 a barrel, while spot gold dipped (-0.1pc) to $ US1,868.13 ounces.

US markets are reducing high unemployment

The Dow closed 12 points lower (flat) at 31,176 points, while the S&P 500 was largely unchanged at 3,853. Both indices are trading near their highs.

Nasdaq Composite went up (+ 0.6pc) to 13,531, its new close high.

Technology stocks drove the Nasdaq higher, especially Apple (+ 3.7pc), which is expected to post solid quarterly profits.

Investors are increasingly optimistic that big technology companies will exceed expectations, when they publish their earnings reports next week.

This week, shares in Apple (+ 7.7pc), Facebook (+ 8.6pc) and Microsoft (+ 5.8pc) have jumped 7.7 ahead of their December quarter results.

Overall, investors were not bothered by the latest job figures, which showed that the number of Americans filing new claims for unemployment benefits dropped slightly to 900,000 last week.

However, jobless claims remained stubbornly high as the COVID-19 pandemic ripped through the United States.

The data alleviated concerns that the U.S. labor market could decline further, said Guy LeBas, chief fixed income strategist at Janney Capital Management in Philadelphia.

“Having a flat or slightly improved data point for the second week of January helps argue that the trend is not toward increasing claims,” ​​he said.

The risk of bitcoin regulation

The world’s most popular cryptocurrency, Bitcoin, plummeted to as low as $ US31,000 overnight before matching some of its losses.

It has lost about 27 percent of its value after touching its all-time high (above $ US42,000) on January 8.

The downside comes amid growing concerns that bitcoin is one of several financial market price bubbles.

Fears that the Biden administration might seek to regulate cryptocurrencies also weigh on sentiment, traders say.

During a hearing in the Senate on Tuesday, Janet Yellen, Biden’s nominee to head the US Treasury, expressed concerns that cryptocurrencies could be used to fund illegal activities.

“I think a lot are used, at least in a transactional sense, mainly for illegal financing,” said Dr. Yellen, who is also the former chairman of the US Federal Reserve.

Joseph Edwards of cryptocurrency broker Enigma Securities said these comments had a significant impact.

“The action over the last 36 hours has been largely torn apart from Janet Yellen’s comments on crypto,” he said, adding that it remains unclear exactly what, if anything, the Biden administration would do take it.

“We think it’s probably just a momentum moment rather than a sea change, though,” he said.

The decline comes amid signs that more institutional investors are taking steps to invest in the cryptocurrency.

BlackRock, the world’s largest asset manager, plans to add bitcoin futures to the list of eligible investments for two of its funds, a company filing showed Wednesday.

ABC / Reuters