Global stocks fell and cryptocurrencies plunged further on Wednesday as a threat of unwanted inflation drove investors away from assets deemed vulnerable to any removal of monetary stimulus.

* Digital currencies were also under pressure from new Chinese restrictions on financial institutions that provide services related to cryptocurrency transactions.

* But as the dollar moved away from its lowest levels of the year against its rivals, gold prices, seen as a hedge against inflation, reversed their recent course and were trading lower, away from their highs of almost four months.

* “The image of the bitcoin flow continues to deteriorate and points to a continued decline in institutional investors,” JPMorgan analysts wrote in a research note.

* Institutional investors appeared to be moving away from cryptocurrency and back to traditional gold, reversing a trend from the previous two quarters, they added.

* Cautious sentiment pervaded equity markets, with attention focused on releasing the minutes of last month’s meeting of the Federal Reserve later in the session.

* The STOXX 600 Index was down 1.3%, heading for its biggest drop in more than a week, while the MSCI Global Stocks indicator was down 0.4%.

* MSCI’s Broad Asia Pacific Stock Index outside of Japan fell 0.6%, although the Hong Kong and South Korea exchanges are closed for holidays. Japan’s Nikkei lost 1.3%.

* While demand is recovering rapidly as many developed countries have moved forward with COVID-19 vaccination, companies face stumbling blocks from shortages of chips, packaging and, in the United States, workers as well, fueling concern for the higher prices.

* Reflecting an ongoing move in the United States as the global recovery takes hold, British consumer price inflation accelerated sharply to 1.5% in April, data showed Wednesday.

* Euro zone inflation rebounded the same month, and consumer prices rose 0.6% month-on-month for a 1.6% year-on-year increase.

* In the United States, the Fed has stuck to the narrative that a recent rise in inflation would be transitory and that it should therefore maintain its expansionary monetary policy setting. Minutes from the April meeting are expected to echo that message.

* Bitcoin and Ethereum posted their biggest one-day decline since March last year, with losses in market capitalization for the entire crypto sector approaching $ 1 trillion.

* The sharp declines came after China banned financial and payment institutions from providing cryptocurrency services.

* Bitcoin fell to $ 30,066, the lowest since late January, while Ethereum sank to $ 1,850, its weakest level since late January.

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