Crypto stocks in focus, while traders look ahead to US CPI release

European markets are enjoying an upbeat start to the week, with the uncertainty around trade relations with the US seemingly being put on the backburner for the time being. The expected return of protectionist Robert Lighthizer to run trade policy under the Trump administration points towards plenty of uncertainty ahead for nations with a major trade surplus over the US. The eurozone does find itself in the firing line, with their consistent goods trade surplus likely to provide a target for Lighthizer. With the US potentially seeking to step away from the Ukraine war, the eurozone could be in a troublesome position of having to step up military assistance, while also feeling the brunt of aggressive trade policy shifts from the US.

Chinese stocks continue to flounder, with the Hang Seng losing traction off the back of weak inflation and a disappointing stimulus announcement. With the Hang Seng predominantly being influenced by international investors, the underperformance compared with mainland indices does highlight the global pessimism around China that perhaps is less prominent amongst Chinese domestic investors. Nonetheless, the weekend declines across both CPI (0.3%) and PPI (-2.9%) inflation metrics do serve to highlight the continued weakness in demand as we await the stimulus fuelled rebound in activity that the PBoC will hope to see. With markets having spent much of last week awaiting the news of just how big the stimulus package would be, Friday’s announcement of a 10-trillion Yuan package aimed at easing local government financing strains has sparked a wave a disappointment for those hoping for more direct stimulus.

Looking ahead, the Veterans day holiday does provide the basis for lower volumes, although markets are open as normal. The big move came from Bitcoin over the weekend, with BTCUSD rising to fresh all-time highs of $82,000. With that in mind, US-listed stocks such as Coinbase and Microstrategy look in line to receive a fresh boost at the open. Elsewhere, CRM firm Monday.com will announce their earnings in a week that also sees the likes of Home Depot, Alibaba, Cisco, and Walt Disney report. On the economic front, the US inflation report comes at a timely moment, with markets second guessing whether a December rate cut will come to fruition or not. While Trump’s policies have been largely deemed to be inflationary, the continued slump in energy prices does at least keep a lid on one key element that helps drive price pressures throughout the world.