Central Banks Drive Mixed Market Reactions as Bitcoin Surges

Last week's market moves were dominated by central bank actions. The Federal Reserve raised its federal funds rate 25 basis points to 3.75-4.00%, its first hike since July 2023, while the Bank of Japan tightened to a 31-year high of 1.25%. Equity markets reacted differently: the Nasdaq Composite Index gained +0.7%, but the Dow Jones Industrial Average fell -1.7%.

Asset classes were mixed as well. Brent crude briefly crossed $100, driven by renewed Middle East shipping threats, before easing back near $99 at week's end. Gold declined to trading near $4,285 on Monday from August highs above $4,700 due to rising yields increasing the opportunity cost of holding non-yielding assets.

Bitcoin proved most resilient among major cryptocurrencies, reclaiming $80,000 on Friday and closing the week at $80,901, up +4.8%. This came despite a mid-week setback to the US CLARITY Act crypto regulation bill.