Global markets at record highs; bitcoin hits $50,000 – business live

It will be interesting to see how companies respond to global anti-money laundering regulatory regimes when they have ambitions to accept Bitcoin as a form of payment.

Cryptoassets have long been criticised for facilitating financial crime including money laundering and fraud.

Last month, European Central Bank president Christine Lagarde called for global regulation of Bitcoin, saying it was a “highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity,”

Bitcoin rose above $50,000 on Tuesday to a new record high, building on a rally fuelled by signs that the world’s biggest cryptocurrency is gaining acceptance amongst mainstream investors.

Bitcoin hit a new high of $50,602, and was last up 5% at $50,300. It has risen around 72% so far this year, with most of the gains coming after electric carmaker Tesla said it had bought $1.5 billion in bitcoin.

It also said it would accept the currency as payment.

But Tesla was only the latest in a string of large investments that have vaulted bitcoin from the fringes of finance to company balance sheets and Wall Street dealing desks, as U.S. firms and traditional money managers have started to buy a lot of it.

Associated Press have a pithy take too:

Back in mid-August it was trading around $12,000, before accelerating through the autumn, hitting $20k for the first time in December.

Since then it’s more than doubled, and has been on a tear this month:

<!–[if IE 9]><![endif]–>

Some institutional investors have been taking bitcoin seriously over this time – including investment manager Ruffer, which took a position in November.

Ruffer said it was a defensive move to protect against currency devaluations, explaining in December that:

We see this as a small but potent insurance policy against the continuing devaluation of the world’s major currencies. Bitcoin diversifies the company’s (much larger) investments in gold and inflation-linked bonds, and acts as a hedge to some of the monetary and market risks that we see’

<!–[if IE 9]><![endif]–>

Virgin Wines is to float on the London Stock Exchange next month with a valuation of about £100m as the Covid-19 pandemic increases demand for its home delivery business model.

The company, bought out of Sir Richard Branson’s Virgin group in 2005, mostly sells wine through its WineBank and Wine Plan subscription schemes, but also on a pay-as-you-go basis. It has 169,000 active customers, of which 147,000 are members of its subscription schemes.

The company has benefited as people have been spending far more time at home during the pandemic, and pubs and bars have been shut during lockdowns. It said customers were spending more to buy high quality wine. The off-trade market for wine specialists was estimated to be worth £2.4bn last year.

The FTSE 100 has dropped back from its one-month high, now down 4 points at 6751.

Mining giants are still up following this morning’s results from BHP Billiton (+1.8%) and Glencore (+3.3%), along with jet engine maker Rolls-Royce (+2.3%) and HSBC (+1.8%).

But UK-focused companies are dipping back after Monday’s rally, with catering business Compass (-2.6%), retail chain JD Sports (-2.2%), and DIY group Kingfisher (-1.8%) among the fallers.

<!–[if IE 9]><![endif]–>

The Financial Times have an interesting story this morning – that China is considering limited exports of rare earth minerals to the US.

That could be a significant move, as such materials are essential for certain electronics – including green technology and military equipment – and much of the production comes from China.

The FT reports:

China is exploring limiting the export of rare earth minerals that are crucial for the manufacture of American F-35 fighter jets and other sophisticated weaponry, according to people involved in a government consultation.

The Ministry of Industry and Information Technology last month proposed draft controls on the production and export of 17 rare earth minerals in China, which controls about 80 per cent of global supply. Industry executives said government officials had asked them how badly companies in the US and Europe, including defence contractors, would be affected if China restricted rare earth exports during a bilateral dispute.

“The government wants to know if the US may have trouble making F-35 fighter jets if China imposes an export ban,” said a Chinese government adviser who asked not to be identified. Industry executives added that Beijing wanted to better understand how quickly the US could secure alternative sources of rare earths and increase its own production capacity.

Eurozone GDP shrank by 0.6% in the October-December quarter, statistics body Eurostat has reported.

That’s better than the first estimate of a 0.7% contraction. But as many economists forecast that GDP will also shrink in the current quarter, the eurozone is still in double-dip territory.

For 2020, GDP shrank 5%, again slightly better than the 5.1% first reported.

In contrast, the UK economy grew by 1% in October-December – but shrank by 9.9% during last year.

Eurostat also reports that employment picked up in the last quarter, but is still around 2% lower than a year ago, before the pandemic.

It reflects the strong growth in the commodity markets being fuelled by new infrastructure and the energy transition as we move away from Covid.