World stock markets and bitcoin break records

(Paris) Bitcoin and stock markets continue to break record after record, like the Dax, the flagship index of the Frankfurt Stock Exchange on Wednesday, still riding on the optimism born from the prospect of key rate cuts from central banks.

Low interest rates encourage risk-taking by investors, whether by purchasing stocks or more speculative products such as cryptocurrencies.

Gold also benefits from this movement, a drop in interest rates weighing on the dollar, a currency which competes with it.

All of these financial assets had set records during periods of low rates, in the summer of 2020 for gold, and at the end of 2021 for many stock indices and bitcoin. The increase in interest rates to levels not seen in several decades, in response to soaring inflation, had severely affected them in 2022.

But since the end of 2023, central bankers have changed their tone and are openly considering interest rate cuts in 2024, with investors now agreeing on June for the first move.

“The appetite for risk is high” among investors, because the markets have “confidence” in central banks to “achieve their soft landing”, that is to say bring inflation back around the target of 2% without causing a strong economic recession, underlines Florian Ielpo, head of macroeconomic research at Lombard Odier.

Beyond this engine, each asset is also driven by its own trends.

Stocks dream of AI

Like the American electronic chip giant Nvidia, which in a few months has become the third most valued company in the world, equity indices are boosted by the promises of artificial intelligence.

On Wall Street, the broader S&P 500 index set a new high on Monday after the latest US inflation figures.

The symbolic thresholds are falling, such as the 40,000 points for the Nikkei in Tokyo on March 4, the 8,000 points for the Parisian CAC 40 on March 7, and the 18,000 points for the Frankfurt Dax on Wednesday.

Faced with the surge in stocks for several months, which each time push back the imagined ceilings, the “fear [des investisseurs NDLR] “missing out” on significant capital gains by staying away from the markets is now the main driver of the rise in large companies, judges Ipek Ozkardeskaya, analyst at Swissquote Bank.

“In addition to AI, American growth for 2024 has been revised significantly upwards in recent months,” observes Charles de Riedmatten, manager of Myria AM.

Bitcoin soars

After surpassing its 2021 peak last week, bitcoin hit a new record high at $73,664 on Wednesday.

A spectacular rise for the most famous of cryptocurrencies, which had fallen to less than $15,500 in November 2022, weighed down by the bankruptcy of the FTX exchange platform, until then a flagship company in the sector.

But the authorization by the American stock market watchdog of investments indexed to bitcoin, allowing a larger part of the public to invest in these cryptoassets without directly holding them, boosted prices.

This momentum, which is added to more technical elements on the production of bitcoins, carries many cryptoassets, such as Ether, which reached its highest since December 2021 on Tuesday, at $4,092.15.

Significant gold buybacks

Gold also broke numerous records at the beginning of March, reaching $2,195.15 per ounce on Friday, at the end of a series of nine rising sessions, with more than 8% gains in total.

The price fell a little at the start of the week, but remained close to $2,170 on Wednesday.

The demand for gold is greater. “In January, central banks reported increasing their official global gold reserves by 39 tonnes. This represents more than double December, and the eighth consecutive month of increase, underlines John Plassard, investment specialist at Mirabaud.

“Persistent geopolitical instability” also plays a role and encourages investment in this asset deemed safe, according to Ricardo Evangelista of ActivTrades.

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