Morning Bid: Bitcoin joins the risk-on party

A look at the day ahead in European and global markets from Ankur Banerjee

You know markets are fully risk-on when cryptocurrencies are on a tear, with bitcoin joining global stocks to scale a record peak as the near certainty of U.S. interest rate cuts bolsters risk sentiment and weighs on the dollar.

The world's best-known cryptocurrency, bitcoin, has a lot going for it: prospects of lower interest rates, a more favourable regulatory environment, and bullish inflows from institutional investors.

Ether too has been on the charge, hovering near its highest since November 2021, becoming the token of choice for those looking for more active returns. In fact, ether is up 42% this year, outstripping the 32% gain for bitcoin.

Stocks in Asia were taking a bit of a breather after a blistering rally this week. Japanese shares fell after hitting a record high, while tech-heavy Taiwan and South Korean shares eased after recent highs.

Investors are wagering that the Federal Reserve will resume cutting interest rates from next month, with traders starting to even price in odds of a 50 basis points cut after comments from Treasury Secretary Scott Bessent.

"If we'd seen those numbers in May, in June, I suspect we could have had rate cuts in June and July. So that tells me that there's a very good chance of a 50 basis-point rate cut," in September, Bessent said in an interview on Bloomberg Television.

Fed Chair Jerome Powell, who has been regularly lambasted by U.S. President Donald Trump, is expected to speak at a central bank research conference in Wyoming next week and the focus will be on his tone on policy path.

Bessent also said the Bank of Japan will likely be raising interest rates as it is behind the curve in dealing with the risk of inflation, leading to strong gains in the yen, which stayed around its strongest level in three weeks.

Investor focus during European hours will be on a swathe of economic data that will offer a glimpse of the tariff uncertainties and the impact of the duties on the economy.

Key developments that could influence markets on Thursday:

Economic events: Euro zone flash GDP for Q2, UK prelim GDP for Q2

(By Ankur Banerjee; Editing by Muralikumar Anantharaman)