Markets, oil drop in Asia but bitcoin edges towards $50,000

Oil prices retreated from 13-month highs.

HONG KONG (AFP) – Markets fell in Asia on Friday in holiday-thinned trade with investors awaiting developments in US stimulus talks, while bitcoin hit a new record as it crept towards $50,000.

Oil prices also retreated from their 13-month highs after investors were given a reality check on expectations for demand this year, despite expectations the global economy will see a strong recovery.

Equities across the planet have rallied this year on the back of vaccine rollouts, falling infection and death rates, and optimism US President Joe Biden will push through most of his $1.9 trillion rescue package.

Hopes for his spending deal were given a boost Thursday by news that first-time claims for unemployment benefits fell less than estimated last week.

The S&P 500 and Nasdaq hit new records again, though the Dow was marginally lower.

With most of Asia closed for the Lunar New Year holiday, business was limited. Tokyo and Wellington were all in the red, while Sydney was also hit by news of snap lockdown in Melbourne.

But Axi’s strategist Stephen Innes said: "With vaccination rollouts on turbo boost and the current lockdown abatement doing what it is supposed to do by taming the virus spread, there is a solid chance that reported Covid-19 cases could shift close to zero in the second quarter."

He added that Biden’s fiscal package and a planned infrastructure programme that is in the works would provide a "double lift off. As a result, the economic mood music should attune higher in March, and the recovery could be set to surge in the second quarter."

Bitcoin continued to hit new highs, peaking at $48,930 Friday, having been given another boost after MasterCard and US bank BNY Mellon moved to make it easier for people to use the cryptocurrency.

That came days after Tesla announced it had bought $1.5 billion in Bitcoin and would soon accept it in payment.

However, there was a warning from a former top US regulator about buying into the unit.

Sheila Bair, who was chair of the US Federal Deposit Insurance Corporation during the global financial crisis, said: "Stay away from it."

She told Bloomberg Radio: "It’s volatile. It’s at nosebleed levels now. We don’t know how sustainable that is.

"If you’re a very wealthy person with some money to risk, fine, but no -- I don’t have a lot of confidence in it."

Oil prices extended Thursday’s drop, having risen for more than a week to highs not seen since January last year.

The commodity took a hit after the International Energy Agency said demand would not be as strong as forecast.

"Renewed lockdowns, stringent mobility restrictions and a rather slow vaccine rollout in Europe have delayed the anticipated rebound," it said in a monthly report.

Analysts said traders will be keeping a keen eye on next month’s meeting of OPEC and other top producers, with speculation they could begin turning the taps on after cutting output for most of last year in reaction to a price rout. 

Key figures around 0620 GMT

Tokyo - Nikkei 225: DOWN 0.1 percent to 29,520.07 (close)

Sydney - S&P/ASX 200: DOWN 0.6 percent to 6,806.70 (close)

Shanghai - Composite: Closed for a holiday

Hong Kong - Hang Seng: Closed for a holiday

Pound/dollar: DOWN at $1.3798 from $1.3816 at 2200 GMT

Euro/dollar: DOWN at $1.2128 from $1.2131

Euro/pound: UP at 87.90 pence from 87.77 pence

Dollar/yen: UP at 104.84 yen from 104.74 yen

West Texas Intermediate: DOWN 0.7 percent at $57.86 per barrel

Brent North Sea crude: DOWN 0.6 percent at $60.78 per barrel

New York - Dow: FLAT at 31,430.30 (close)

London - FTSE 100: UP less than 0.1 to 6,528.72 (close)