European shares hover around nine-month highs, while gold gets a boost from a weaker dollar and cryptocurrencies slide
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- European shares held around nine-month highs, led by gains in German stocks, while the dollar eased, which boosted gold.
- Cryptocurrencies ran into a wall of selling after this week's rally, with Bitcoin down by $2,000 on the day and Ripple's XRP losing as much as 30% on the day.
- The US Thanksgiving holiday kept trading volumes fairly subdued, with futures showing a modest rise on the day.
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European shares held mostly steady around nine-month highs on Thursday, with German blue-chips outperforming the broader region, while a weaker dollar helped prop up gold, and cryptocurrencies ran into a wall of profit-taking after a huge rally this week.
Disappointing US data did little to impact the modest optimism prevailing in the European markets, although it did weigh on the dollar, which traded lower against a basket of major currencies.
Weekly US initial jobless claims came in higher than expected for a second week in a row, while data on consumer finances showed a worrying decline in personal income. Both of which suggest the economy may be losing momentum, as cases of COVID-19 around the country spike.
With US markets closed for Thanksgiving, futures on the S&P 500, Dow Jones and Nasdaq 100 were flat to modestly higher, trading between 0.1 and 0.3% higher on the day.
"Today promises to be a somewhat quiet affair, thanks to the US Thanksgiving holiday and a distinct lack of any major economic releases," IG analysts said in a note. "Nevertheless, with markets failing to react to yesterday's disappointing jobless claims figure, there is an argument that the current bullish outlook means any short-term economic weakness is being largely overlooked in any case."
Frankfurt's DAX was trading roughly steady on the day, while the mid-cap MDAX index rose 0.3%. This made it one of the best-performing indices in Europe, despite Germany reporting record cases of COVID-19 and chancellor Angela Merkel keeping restrictions in place until at least Christmas.
The Stoxx 600, which hit nine-month highs this week, was almost unchanged on the day, as gains in the technology, healthcare and travel sectors offset losses in banking shares, oil and gas, and retail stocks.
Gold rose by around 0.8%, gaining some respite after a wave of selling in the past two weeks drove the price to its lowest since July. Gold often trades inversely to the dollar index, although this relationship has eroded somewhat over the course of November.
The prospect of a vaccine has fed optimism over the economic outlook and, as a result, sent investors flocking into higher-risk assets, such as small-cap stocks, emerging-market currencies and cryptocurrencies, leaving gold and the dollar both lagging.
Commerzbank analysts said in a note: "In this environment, gold is initially likely to trend sideways in a corridor of between $1,800 and $1,850."
Cryptocurrencies dropped sharply, as traders booked profits on this week's stellar rally. Bitcoin, the largest by market capitalization, fell by nearly 12% to around $16,940, having risen earlier this week to a near-record high of $19,497.
"It feels more and more like we're hitting a Bitcoin tipping point," said John Kramer, trader at crypto trading firm GSR. "In fact, a cooldown is to be expected."
Smaller coins Ethereum and Ripple tumbled, with Ethereum losing nearly 17% to trade around $494, well off this week's 2-1/2-year high of $621. Meanwhile, Ripple lost nearly 27% on the day, falling to $0.503, having almost entirely reversed the rally this week that took the price to a two-year high of $0.78.
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