Global markets hit a ceiling this week as initial gains were met by a mix of legislative hurdles and a stronger US dollar. While several asset classes reached for new highs early on, the momentum faded by Friday as investors moved into a “risk-off” mode ahead of the long US holiday weekend.
Bitcoin nearly touched the $98,000 mark midweek, fueled by a massive $1.2 billion purchase from Strategy Inc. However, the rally stalled after a key US Senate vote on the Digital Asset Market Clarity Act was delayed. Opposition to the bill, including public criticism from the CEO of Coinbase, dampened investor confidence and pushed the price back toward $95,000. Traders are now watching to see if Bitcoin can hold this level or if it will slip back into the $90,000 range.
The FTSE 100 also struggled to maintain its record-breaking run. The index was dragged down by a sharp drop in mining and commodity stocks, with copper and silver prices falling significantly on Friday. While property companies like British Land saw some gains on interest rate hopes, educational publisher Pearson had a difficult week, losing 12% of its value following a contract loss in the US.
In the US, economic data showed that industrial production is rising faster than expected. While this is good for the economy, it has reinforced the idea that the Federal Reserve might keep interest rates higher for longer.
This outlook gave the US Dollar a boost, which in turn put pressure on Gold. After hitting an all-time high of $4,642 on Wednesday, Gold prices retreated as investors locked in profits. Gold closed lower at $4,596 on Friday.
Stocks in New York were mixed at the close. While the S&P 500 and the Nasdaq faced initial selling pressure at the open, they later pared those losses to finish up 0.1% each. Meanwhile, the Dow Jones Industrial Average lagged behind, ending the session slightly lower.
Looking toward next week, the focus remains on the $100,000 psychological barrier for Bitcoin and close attention will be paid to any further escalating geopolitical headlines.
With US markets closed this Monday for Martin Luther King Day, trading volume is expected to be light in the early part of the week, leaving prices sensitive to any unexpected headlines.