Bitcoin breaks $30,000 as economy slows

A sign for a Bitcoin automated teller machine (ATM) at a gas station in Washington, DC, United States, Thursday, January 1[ads1]9, 2023.

Al Drago | Bloomberg | Getty Images

This report is from today’s CNBC Daily Open, our new international markets newsletter. CNBC Daily Open brings investors up to date on everything they need to know, wherever they are. Do you like what you see? You can subscribe here.

Markets were largely unchanged on Monday, although bitcoin breached $30,000. Investors await bank earnings and price reports.

  • US stocks were unchanged on Monday after the long weekend, suggesting investors are still weighing – and awaiting – economic data. Asia-Pacific markets were mostly higher on Tuesday. South Korea’s Kospi climbed 1.4% as the country’s central bank left interest rates unchanged at 3.5%. On the other hand, China’s Shanghai Composite fell 0.4% as prices in the country rose 0.7% year-on-year for March, which was lower than expected.
  • Bitcoin broke the $30,000 barrier for the first time since last June. The biggest cryptocurrency by market capitalization is up 86% year-to-date as investors flocked to it amid the banking crisis.
  • Warren Buffet said in an interview with Nikkei that he was thinking of investing more in five Japanese trading houses, which are conglomerates that import various products to Japan. Shares of the Japanese trading house rose by at least 2%.
  • Alibaba on Tuesday morning revealed an artificial intelligence chatbot named Tongyi Qianwen that will eventually be integrated with all products. The news had little lasting impact on the company’s Hong Kong-listed shares, which were last up 0.77% – but rival Baidu fell 6.79%.
  • PRO Samsung could see a 96% drop in quarterly profit and plans to cut memory chip production. So why did Wall Street react positively to the news?

US markets reopened on Monday but appeared to retain a post-holiday sluggishness as investors digested more signs of a slowing – but still strong – economy.

First, although consumers felt it was harder to get credit in March, the banking crisis is easing. Charles Schwab said average daily outflows were down from February and the bank had added $53 billion in core net new client funds in March. This trend is consistent with the broader banking industry, according to data from the Federal Reserve. For the period ending March 29, deposits increased by $42.3 billion on a non-seasonally adjusted basis.

Similarly, although the technology sector was hit by bad news, there was a silver lining to the storm clouds. First-quarter data shipments fell — but IDC believes cratering demand will allow companies to complete their “rejigging plans” and improve their supply chains. In fact, Dell advanced 2.98% and HP rose 1.54% on the news — although Apple fell 1.6%, likely because it saw the steepest drop in shipments.

The same “bad news is good news” dynamic played out in the memory chip sector. Samsung’s plan to cut chip production helped push rivals Micron Technology and Western Digital up by 8.04% and 8.22%, respectively. There were too many chips flooding the market, analysts say, and tighter supply is a good thing.

Outside these industries, however, the major stock indices were largely unchanged. The S&P 500 rose 0.1%, the Dow Jones Industrial Average rose 0.3% and the Nasdaq Composite fell 0.03%.

Investors are awaiting a number of economic indicators this week. On the earnings front, JPMorgan Chase, Wells Fargo and Citigroup report quarterly results. Traders will certainly review these reports, but they will also want to see what the US Consumer Price Index and the Producer Price Index say about the economy. If they reinforce last week’s jobs report and indicate that the economy is not overheating, the Federal Reserve may actually be able to steer the markets to a fabled “soft landing.” Investors are crossing their fingers.

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