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Key Takeaways
- Stocks rallied following Fed Chair Powell’s remarks on Wednesday
- Bitcoin pushed to $45K after Twitter rolled out the Bitcoin tipping feature
Evergrande’s $300bn Debt Crisis Looms
A tumultuous start of the week roiled the global financial markets as the Chinese property developer Evergrande made waves. The company was facing insolvency due to the potential default on its crippling $300bn in debt.
As the Evergrande crisis threatened to spread across the US and Europe, Wall Street and bourses in the bloc followed Asian stocks in a steep global market selloff. The Dow erased over 600 points from its valuation on Monday.
On the next day, investors couldn’t sustain a solid stock futures rebound and the major averages ended the day near the flat line.
Evergrande is still not out of the woods as the company missed making an interest payment of $83.5 million on Thursday.
Fed Chairman Jerome Powell Reassures Investors
The highlight of the week, Federal Reserve Chairman Jerome Powell appeared on Wednesday for a press conference. In conclusion of a two-day Fed policy meeting, Mr. Powell laid out a tapering timeline that suggested the US central bank may begin reversing its easy-money policies as soon as next month.
In turn, investors were largely optimistic about the economic outlook. They eased their fears about the potential Evergrande collapse and rushed into equities.
Following Mr. Powell’s reassuring comments that the economic recovery was robust, market participants flocked to riskier assets such as stocks. As a result, the Dow Jones gained over 800 points in just two days.
Bitcoin Reaches $45K Following Twitter Announcement
In cryptocurrency, bitcoin rallied to levels around $45,000 near the end of the week. The upside swing was propelled by Twitter’s announcement that the social media platform now supported tipping for content in Bitcoin. The newest feature marked a huge leap for bitcoin toward mainstream adoption.
Earlier in the week, the original cryptocurrency slipped to levels below $40,000 for the first time in about two months.
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