Market update: Stocks and crypto slide on US inflation data

• US inflation rose 7.5% for its fastest pace in 40 years; Fed expected to raise rates by 0.5% in March
• Market uncertainty saw stocks sink Thursday and Friday, with bitcoin leading cryptocurrencies in posting similar moves.

Global stocks slid Thursday and were down on Friday as markets reacted to fresh data showing US consumer prices rose at a pace last seen 40 years ago, ahead of the first Fed rate hike in March.

US inflation data rose 7.5%

On Thursday, data revealed US inflation jumped 7.5% year-over-year in January to hit its biggest rate since 1982. The YoY pace was above economists' projections of 7.3%.

On how the Fed is likely to proceed after the hotter than expected CPI data, St. Louis Federal Reserve Bank President James Bullard told Bloomberg on Thursday he’d like to see the central bank go for a 100-basis point hike by July.

UK economy expanded despite Omicron

The UK economy expanded 7.5% in 2021, with data showing a 0.2% decline in December compared to the expected 0.6%. Inflation over the month remained at 5.4% as the gross domestic product (GDP) in the fourth quarter came in at 1%.

The US 10-year Treasury yield jumped above 2% for the first time since August 2019, while the dollar index was hovering around 95.75, firming by 0.2% against a basket of six major global currencies.

Dow falls as stocks slide

US shares dropped in the aftermath of the consumer price index data, with all the indices closing negative. European and Asian markets also traded lower Friday, with stocks in China and Australia all ending the session lower while Japanese shares held slightly higher.

In Europe, stocks closed in the red with the pan-European Stoxx 600 index down 0.59% and UK’s FTSE 100 shedding 0.15%. The French CAC fell 1.27%

The S&P 500 was down 1.31% while the Nasdaq Composite had shed 1.93% in early afternoon trades. Meanwhile, the Dow Jones Industrial Average was down more than 200 points, -0.90%.

Bitcoin retreats from $45,600

Bitcoin was down 3.7% on Friday after selling off from highs above $45,600 on Thursday. 

Although the pioneer cryptocurrency was still more than 17% up over the week, further weaknesses suggested a possible breakdown below support around $43,000. On Friday, the BTC-USD pair was holding around $43,550.

Ether, the native cryptocurrency on the Ethereum network, was also down after the negative sentiment cascaded across risk assets. The ETH-USD pair was changing hands around $3,080, nearly 4% down on the day though weekly gains stood at just over 15%.

Elsewhere, Gold was up 0.3% to $1,841 per ounce and oil was looking to bounce higher after earlier dips in the week. Crude oil was 2.35% higher at $91.99 per barrel.