Bitcoin and airline shares take to the skies

After a lacklustre start, markets turned on a dime- or more specifically on a tweet. US President Donald Trump backpedalling (via Twitter) on plans to launch an attack in Syria encouraged a rebound in sentiment. US equity futures jumped, European markets reversed early losses, and related or not, Cryptocurrencies soared.

The price of Bitcoin surged double digits to break back over $8000. The renewed interest in cryptos might relate to the need for wealthy Russians and Chinese under pressure from new sanctions and tariffs to covertly send money overseas. Bitcoin’s price surge could well be enough to capture the imagination of traders in what is still a very speculative market.

Trump’s tweet raises hopes for a more considered response to the alleged chemical attack in Syria but the movement of warships into the region tell another story. While markets switch to a more ‘risk-on’ mood, crude oil prices fell back from 3-year highs. Oil traders are pricing in a lower risk premium to an escalation in the Syria war and a report from OPEC showing a jump in world oil supplies in March.

The airline sector saw some of the most activity in the UK stock market after British Airways-owner IAG revealed it had bought a stake in rival carrier Norwegian Air. Investors questioned the merits of a possible merger but recognised it could be a boon for other budget airlines. For one, shareholders may be reticent to approve another deal so soon after acquiring Aer Lingus. And two, it is an upfront cost to IAG that could otherwise be spent improving customer experience. If one assumes IAG will lift the fares and cut routes operated by Norwegian, then it reduces competition for the likes of EasyJet, Ryanair and Wizz Air.