Bitcoin has surged past $80,000 and gold reached near three-month highs as investors backed away from US assets amid concerns over a weakening dollar.
The cryptocurrency, the world's largest digital asset by market capitalization, climbed 2.1 per cent to $80,574 on Tuesday morning after reaching $81,104 on Monday, its highest level since May. Bitcoin has gained 25 per cent over the past month, extending a rally from last week when it surged more than 20 per cent in three days.
Meanwhile, gold hovered near a three-month high at $4,636 an ounce. The precious metal, historically traded as a hedge against inflation and currency depreciation, remains on track for its largest monthly gain since 1999.
The surge in alternative assets follows moves by the United States Department of the Treasury to increase purchases of longer-dated government bonds. The buyback measure aims to lower long-term borrowing costs, but it has placed additional downward pressure on the US dollar.
Treasury bond policy and currency pressure
US Treasury Secretary Scott Bessent said last week that he was attempting to "bring equilibrium" to the US bond market. However, financial market investors remain wary of his ability to curb rising yields on long-dated government debt securities.
Susannah Streeter, chief investment strategist at UK investment firm Wealth Club, said investors are actively turning toward assets that sit outside traditional monetary policy.
"The so-called 'debasement trade' is gathering momentum, with investors seeking assets that are harder to devalue through monetary policy," Streeter said. "So, gold is regaining its lustre as a traditional hedge against weakening currency."
Energy markets and airline stocks
Traders largely shrugged off plans announced by Bessent to launch an "economic onslaught" against Iran, a major Middle Eastern oil producer. Brent crude, the global price benchmark for international crude oil trading, settled at just under $92 a barrel.
The steadying crude oil price provided relief for British Airways owner International Airlines Group. Shares in the multinational airline company rose 0.6 per cent in early equity trading in London.
London equity benchmarks and corporate gainers
London stock indexes posted modest gains during morning trading. The FTSE 100, the benchmark index tracking the 100 largest companies on the London Stock Exchange, rose 0.15 per cent, or 15 points, to 10,870. The advance brought the index's gains for the year to 9.24 per cent.
Industrial manufacturing group Melrose led the FTSE 100 gainers, rising 8.5 per cent. The increase came after the company confirmed that the Orange County District Court in California had closed its criminal investigation into a chemical leak at its Garden Grove facility.
The FTSE 250 index, which tracks medium-sized UK public companies, gained 0.21 per cent to reach 24,769. British housebuilder Vistry Group saw its shares spike 9 per cent after securing a grant under the UK Government's Social and Affordable Homes Programme.
Streeter noted that the UK equity market is exhibiting continued resilience despite wider macroeconomic headwinds.
"The London market is proving remarkably resilient given the cocktail of geopolitical tensions, stubborn inflation concerns and uncertainty over the path of interest rates," Streeter said. "The Footsie's relatively low exposure to the tech sector is also helping it avoid some of the turbulence rippling through global tech shares, giving investors a different mix of sectors to rely on."
