Stocks pare gains

Stock markets are paring gains on Tuesday, even following some more strong earnings from big US tech firms, with plenty more to come.

Investors are clearly still impressed with what they’re seeing from earnings season and that has offset nerves coming into the period around the near-term risks to growth. While they may come back to the fore later in the year and limit any upside that we see in the interim, what we’ve heard to this point has come as a relief.

But risks haven’t gone anywhere and we’re continuing to see markets price in higher US rates over the next year which is resulting in a steepening of the yield curve and potentially making investors a little nervous.

Of course, expectations may change dramatically over the coming months if downside economic risks materialise. We’re already seeing rate expectations paring back in the UK as growth concerns rise. Inflation isn’t going anywhere for the next year though which will keep pressure on central banks to do more, especially if they continue to be generous with the term transitory, as they have increasingly become.

The UK budget was heavy on content but as is so often the case, given what’s leaked in the days leading up to it, light on surprises. While pubs are seeing share prices buoyed by tax changes, the broader effect is minimal. The FTSE 250 is up marginally, FTSE 100 a little lower and the pound relatively unchanged compared to before the event.

Bitcoin continues to see profit-taking, falling more than 10%

Bitcoin prices initially held up quite well following the launch of the ProShares ETF last week, despite fears that after such a long build-up we may see some classic buy the rumour, sell the fact price action. It even hit record highs after the launch. As it turns out, rather than spurring a new wave of bullishness and one of those wild surges associated with the cryptocurrency, the profit-taking was merely delayed.

And now it’s broken back below USD 60,000 which begs the question, just how big a correction are we facing? While bitcoin has a history of epic price surges, the corrections can be quite tasty as well. We’ve seen some support around USD 58,500 which was notable resistance on the way up, while USD 56,500 and USD 53,500 could offer further support below.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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