Daily Update: August 25, 2021

Start each enterprise day with our analyses of probably the most urgent developments affecting markets at the moment, alongside a curated number of our newest and most necessary insights on the worldwide financial system.

Cryptocurrency’s advance from Wall Street to Main Street has established digital belongings removed from the perimeter. Now that crypto is becoming a member of the mainstream, regulation and decarbonization are the subsequent frontiers for decentralized belongings. 

In the U.S., digital-asset traders have expressed concern over two amendments within the proposed infrastructure invoice that, if handed, may change the business by imposing stricter guidelines on the taxation of digital belongings and requiring crypto corporations to report sure transaction info to the Internal Revenue Service. In Asia, consultants imagine extra cohesive rules on crypto belongings can defend banks and clients from the advanced and risky facets of the market, in line with S&P Global Market Intelligence.

Separate from regulatory oversight, digital asset firms are looking for options to the big vitality calls for of mining cryptocurrencies. One bitcoin transaction requires 1,695 kilowatt hours of electrical energy, corresponding to what a mean U.S. family makes use of in 58 days, and produces 805 kilos of carbon dioxide—equal to the carbon footprint of 1.8 million Visa transactions, in line with Dutch economist and blockchain skilled Alex de Vries, as reported by S&P Global Market Intelligence.

“ESG is one thing that many institutional traders inquire about as they discover digital belongings, simply as they ask about volatility and different concerns for this nascent asset class,” a spokesperson for Fidelity Digital Assets Services, a subsidiary of Fidelity Investments and a supplier of cryptocurrency custody and different companies to institutional traders, advised S&P Global Market Intelligence. “Today, a considerable portion of bitcoin mining is powered by renewable vitality or vitality that will in any other case be wasted (stranded gasoline) and miners are more and more in search of extra environment friendly and cleaner vitality.”

Swiss buying and selling home Mercuria introduced at a June 16 convention hosted by S&P Global Platts that the corporate is offering bitcoin producers with renewable vitality to cut back emissions generated from crypto mining and buying and selling. Blockchain platforms like Re|Source are aiming to convey transparency into battery steel provide chains by permitting customers to hint the origination of essential commodities like cobalt.

This 12 months has seen fast change for the crypto market contributors.

Recovering from a rollercoaster hovering from $65,000 in January, to lows of close to $20,000 in July, Bitcoin is presently buying and selling at round $50,000. Goldman Sachs has begun buying and selling crypto futures, with different banks set to comply with shortly. Insurers have begun to discover the chances of investing in crypto. Communities with giant unbanked populations, like in Indonesia, are turning to gold-based blockchain techniques to increase monetary inclusion. Cryptocurrency exchanges are producing hundreds of thousands in income each day. S&P Dow Jones Indices has launched 4 new decentralized currency indexes this 12 months that demystify digital belongings and measure the market performance of their respective currencies: the S&P Bitcoin Index, S&P Ethereum Index, and S&P Crypto Mega Cap Index in May, and the S&P Cryptocurrency Broad Digital Market Index in July.

Meanwhile, there have been high-profile cyber scandals involving decentralized belongings this 12 months, together with the cyberattack on Colonial Pipeline in May, which was resolved with a virtually $4.5 million Bitcoin ransom paid to the DarkSide prison hacker group, and the $600  million in decentralized belongings seized this month from the cryptocurrency platform Poly Network and returned to the corporate this week by the hackers themselves.

Today is Wednesday, August 25, 2021 and right here is at the moment’s important intelligence.

The Credit Cycle

Default, Transition, and Recovery: 2020 Annual Greater China Corporate Default and Rating Transition Study

Greater China’s speculative-grade default charge elevated to 4.2% in 2020, from 3.1% in 2019. Globally, the 2020 speculative-grade default charge was 5.5%, up from 2.5% in 2019. By variety of firms, seven rated by S&P Global Ratings (together with two confidential issuers) defaulted in Greater China in 2020, in contrast with 9 defaults the prior 12 months.

—Read the complete report from S&P Global Ratings

Market Dynamics

Why Now Is A Good Time To Own European Bank Stocks

Unloved for the higher a part of the final decade, financial institution shares are among the many prime performers within the European inventory markets in 2021, as a COVID-19 rebound, increased earnings expectations and the return of dividends bolster the sector.

—Read the complete article from S&P Global Market Intelligence

U.S. Northeast Spot Natural Gas Prices Jump As Henri Storm System Weakens, Temperatures Rise

Cash costs for next-day flows of pure gasoline within the US Northeast noticed a double-digit improve in Aug. 23 buying and selling amid a agency demand outlook, as scorching climate seems within the forecast and work begins to revive energy in New England following Hurricane Henri.

—Read the complete article from S&P Global Platts

Banking Industry Under Pressure

Benelux Banks Turn To Fees As Low Rates Stunt Net Interest Income

As strain from low rates of interest lingers, huge banks within the Netherlands and Belgium are turning their focus to price earnings to carry their profitability regular.

—Read the complete article from S&P Global Market Intelligence

Quotes Of The Quarter: APAC Bankers Optimistic About Growth Amid Uneven Recovery

Top bankers in Asia-Pacific are cautiously optimistic concerning the business’s development prospects, although they’re conscious of uneven financial restoration and the emergence of recent variants of COVID-19.

—Read the complete article from S&P Global Market Intelligence

Technology & Media

U.S. Online Grocery Sales Growth Set To Reaccelerate As COVID-19 Concerns Grow

Though grocery retailers noticed a pick-up with in-store buying over the summer season, a brand new wave of COVID-19 infections may drive some U.S. customers again on-line. Walmart Inc. and Target Corp., which rank among the many nation’s prime grocery retailers each in shops and on-line, reported sturdy in-store buying within the quarter led to July. Analysts warn, although, that August may look very totally different as a result of emergence of the extremely transmissible delta variant of the coronavirus within the U.S. and the return of mandates round mask-wearing.

—Read the complete article from S&P Global Market Intelligence

Nextera’s Robo Remains Highest-Paid U.S. Utility CEO In 2020

For the third 12 months in a row, NextPeriod Energy Inc. Chairman, President and CEO James Robo was the highest-paid utility government within the U.S. based mostly upon a mix of money compensation, shares and choices granted, and non-equity incentive plan compensation.
—Read the complete article from S&P Global Market Intelligence

Cellnex Plans Next European Shopping Spree Amid Antitrust Scrutiny

An antitrust evaluate within the U.Okay. could give deal-hungry tower operator Cellnex Telecom SA pause in different established markets because it seeks to spend freshly raised capital, analysts and legal professionals stated.

—Read the complete article from S&P Global Market Intelligence

ESG within the Time of COVID-19

Critics: PJM’s Minimum Offer Price Rule Overhaul Will ‘Crater’ Capacity Market

The PJM Interconnection is going through fierce pushback to its proposed alternative for a extremely contentious minimal provide worth rule, or MOPR, used to blunt the impact of member states’ clear vitality insurance policies within the grid operator’s multibillion-dollar capability market.

—Read the complete article from S&P Global Market Intelligence

Listen: Marine Fuels of the Future: Methanol

Ahead of London International Shipping Week 2021, a six-part S&P Global Platts podcast miniseries appears into the pricing of different marine fuels for the worldwide delivery business. In every episode of Marine Fuels of the Future, Platts editors examine the present state of the key gasoline alternate options, because the delivery sector seeks to cut back its greenhouse gasoline emissions forward of stringent caps in 2030 and 2050. Episode three appears at methanol – a cleaner-burning hydrocarbon that’s proving well-liked amongst shipowners.

—Listen and subscribe to Future Energy, a podcast from S&P Global Platts

The Future of Energy & Commodities 

Market Movers Europe, Aug 23-27: Nord Stream 2 Regulatory Issues, Oil And Gas Demand In Focus

In this week’s highlights: Oil markets keep watch over highway gasoline consumption, the European gasoline market stays centered on provide points, with Nord Stream 2’s progress nonetheless dominating the backdrop, whereas petrochemical markets are grappling with a scarcity of methanol provide.

—Watch and share this Market Movers video from S&P Global Platts

Oil In Floating Storage Rebounds To Three-Month Highs

The quantity of crude oil and condensate in tankers worldwide is beginning to as soon as once more rebound as sanctioned Iranian oil begins to mount up, whereas oil offshore China can be on the rise as its crude demand begins to gradual.

—Read the complete article from S&P Global Platts

Written and compiled by Molly Mintz. 

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