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Stocks slip, bitcoin extends record run

·3-min read
Wall Street stocks still remain near record highs despite pulling back on Wednesday

Global stock markets mostly fell Wednesday on profit-taking after a strong global rally, with investors worried valuations may have gone too high and about interest rates.

The Dow slid off of a record close on Tuesday, and the S&P 500 and Nasdaq Composite also moved lower after dipping on Tuesday.

European stocks finished lower, with losses posted across most of Asia.

Oil prices rose, holding near 13-month highs.

Lifted in recent months by OPEC production cuts, there has been added support this week from a big freeze in Texas that has hammered output in the key US production state.

Bitcoin hit another record, at $51,719.10, having broken $50,000 for the first time on Tuesday.

The dollar rose Wednesday against the euro and pound, but dipped against the yen.

Analysts said there was room for a drop in equities, but the general view is that they will resume their strong upward march as Covid vaccine rollouts, slowing infection rates and the easing of lockdowns allow economies to return to normal.

The focus was firmly on Washington, where US lawmakers ponder the next move on President Joe Biden's $1.9-trillion stimulus package, the prospect of which has been a key driver of a months-long surge in global equities.

Bets that the vast spending splurge will hand an extra boost to the world's top economy -- and the prospect of business reopenings -- have also fired inflation expectations, sending US Treasury yields close to one-year highs this week.

That has led to concerns about rising borrowing costs, which market-watchers fear could undercut the recovery and hit consumer spending.

"The move up in yields has been driven by increasing inflationary concerns amid a rise in energy prices along with the prospect of a big US fiscal stimulus and the global recovery entering a more solid stage," said National Australia Bank's Rodrigo Catril.

Market analyst Chris Beauchamp at online trading platform IG said: "The market rally has been built on the twin pillars of low interest rates and fiscal stimulus."

A rise in bond yields and inflation could push the US Federal Reserve to push up interest rates faster than it has indicated, while a 5.3-percent jump in US retail sales in January could undermine support for massive stimulus.

"Neither of these threats is likely to withstand close analysis, but the overstretched nature of the market leaves it vulnerable to these brief outbreaks of nervousness," said Beauchamp.

British inflation meanwhile climbed to 0.7 percent last month from 0.6 percent in December on higher food prices, the Office for National Statistics said Wednesday.

Analysts expect British inflation to rise strongly in the coming months with the UK economy tipped to emerge from its latest coronavirus lockdown.

- Key figures around 1630 GMT -

New York - Dow: DOWN 0.1 percent at 31,485.88 points

EURO STOXX 50: DOWN 0.7 percent at 3,699.85

London - FTSE 100: DOWN 0.6 percent at 6,710.90 (close)

Frankfurt - DAX 30: DOWN 1.1 percent at 13,909.27 (close)

Paris - CAC 40: DOWN 0.4 percent at 5,765.84 (close)

Tokyo - Nikkei 225: DOWN 0.6 percent at 30,292.19 (close)

Hong Kong - Hang Seng: UP 1.1 percent at 31,084.94 (close)

Shanghai - Composite: Closed for a holiday

Euro/dollar: DOWN at $1.2039 from $1.2105 at 2150 GMT

Pound/dollar: DOWN at $1.3845 from $1.3902

Euro/pound: DOWN at 86.95 pence from 87.07 pence

Dollar/yen: DOWN at 105.85 yen from 105.99 yen

Brent North Sea crude: UP 0.5 percent at $63.64 per barrel

West Texas Intermediate: UP 0.3 percent at $60.64 per barrel