Global Stocks Gain Ground; Crypto Steadies

Stocks and bonds have been pummeled globally this year. Driving the selloff are the push by the Federal Reserve and other central banks to quell inflation, and concerns that higher borrowing costs will tip economies into recession.

In response to the central bank’s moves, investors have been selling off their most speculative bets. Cryptocurrency prices continue to plummet, leading several major cryptocurrency companies to lay off staff. On Saturday, bitcoin fell below $18,000, a more than 70% decline from its November all-time high of $67,800, before edging up. 

The sudden squeeze in available, spendable capital, often called liquidity, is exacerbating the crypto selloff, and it isn’t something that can easily be fixed, Ryan Shea, an economist at crypto investment firm Trakx, said this weekend. Unlike in the traditional markets, “there is no central bank to step in and intervene, the process just has to play out,” he said.

More previously highflying crypto firms have been feeling the pain in what has been dubbed a “crypto winter.” Cryptocurrency lender Babel Finance told customers Friday that it was suspending redemptions and withdrawals from all products, citing “unusual liquidity pressures.” One of the largest crypto lenders, Celsius Network LLC, hasn’t let users withdraw funds for roughly a week, citing extreme market conditions.

This week, investors will parse comments from Fed Chairman

Jerome Powell

to Congress on Wednesday and Thursday. They will seek clues about the chances of a second consecutive three-quarter-point increase to interest rates in July. Data on housing, manufacturing output and consumer sentiment will help traders assess the strength of the economy, while inflation runs at its highest rate in more than 40 years.

Financial firm ProShares said it would roll out the first U.S.-listed short bitcoin futures exchange-traded fund this week, allowing investors to effectively bet against bitcoin. The Bethesda, Md., firm’s fund, the Short Bitcoin Strategy ETF, will trade on the New York Stock Exchange and go by the ticker BITI.

U.S. stock and bond markets were shut for the first time Monday for the Juneteenth public holiday. The S&P 500 last week endured its biggest percentage decline since the Covid-19-driven crash of March 2020 after the Fed’s decision to raise interest rates by a three-quarter-point spooked investors.

In commodities, natural-gas prices jumped 5.1% to 123.75 euros—equivalent to around $130—a megawatt-hour in Europe. Russia has continued pumping gas at well below full capacity through Nord Stream to Germany.

Edward Park, chief investment officer at

Brooks Macdonald,

expects investors to edge back into stocks and other riskier assets this week, encouraged by a lack of data on U.S. inflation. He said stocks will remain choppy until energy markets begin to fall, easing the pressure on central banks to tame consumer-price gains.

Brent crude-oil futures edged up 0.4% to $113.56 a barrel, steadying after a sharp drop that began Friday. Concerns that a possible recession would weigh on oil demand led prices to snap a four-week streak of gains.

France’s CAC 40 edged up 0.6% after President Emmanuel Macron lost his majority in the National Assembly. The results of the parliamentary elections will make it difficult for the French leader to advance his pro-business agenda.

Among individual European stocks,

Renault

rose 9.7% after analysts at Jefferies raised their target price for the French car maker.

Kingspan Group,

an Irish building and insulation materials producer, fell 13% after saying trading conditions had deteriorated over the past two months.

In Asia, South Korea’s Kospi fell 2%, weighed down by

Samsung Electronics,

which fell after analysts at

DB Financial Investment

cut the stock’s target price. Japan’s Nikkei 225 lost 0.7%. China’s Shanghai Composite Index was flat and Hong Kong’s Hang Seng edged up 0.3%.

Write to Joe Wallace at joe.wallace@wsj.com