We're continuing to see caution in the markets on Tuesday as investors prepare for an intense 48 hours, with big tech reporting and the Fed meeting.
Tesla got the week underway with some impressive numbers on Monday, not that it's helping their share price that much with all the big tech names on the backfoot. That may change over the next few days as we get results from Apple, Microsoft, Alphabet, Facebook and Amazon.
Stock markets are slightly in the red as we move into the European close but I struggle to view that with any pessimism ahead of the earnings, or the Fed for that matter. Last week's bounceback was phenomenal and was far more indicative of what investors are anticipating, rather than what we've seen since trading got underway on Monday.
The real action starts after the close this evening and Wednesday will be huge. We may even see these markets take a more positive turn as we head into the close on Wall Street and, if we do, that will be far more indicative of expectations over the coming days.
Oil edges higher ahead of inventory data
Oil prices have been levelling off the last couple of days after enjoying a strong rebound from last Monday's sell-off. There hasn't really been much development on this front since the start of the week. Oil, like other risk assets, has been in wait-and-see mode, something that will likely change in the coming hours and days.
The API inventory data may jolt crude prices back into life a little ahead of the close on Wall Street. Investors brushed aside last weeks surprise inventory build, from both API and EIA, and instead focused on the strong fuel demand. EIA is expected to report a 3.4 million draw on Wednesday, a number that could be a nice boost for oil prices ahead of big earnings reports after the close.
Gold continues to consolidate ahead of the Fed
There isn't too much to add on gold that hasn't already been written over the last week. The start of the Fed's blackout period ahead of the meeting appears to have coincided with the yellow metal consolidating around $1,800 with ever-narrower ranges.
We are seeing some minor gains today, with gold slightly back above $1,800 as US yields edge lower but this is nothing more than pre-meeting positioning. The view appears to be that Powell and his colleagues will err on the dovish side and put off any hard decisions until the latest wave has passed and the environment looks a lot clearer.
This makes a lot of sense when you consider that the central bank has previously viewed the inflation numbers as transitory and the country is currently embarking on another wave of infections. But as always, the wording will be crucial and could get investors excited or running for the exits. Just another day in the life of the Federal Reserve.
Bitcoin remains elevated despite Amazon denial
Bitcoin is slowly finding its feet from its latest rollercoaster ride, following reports that Amazon is apparently preparing to accept the virtual currency this year. Naturally this was quickly rejected but in a sign of where we are in the crytpo cycle, the story generated plenty of gains and very little was given back. When traders are feeling bullish, it doesn't really matter that the story wasn't accurate.
The moves were seeing now have been made possible by Elon Musk becoming a one-man support around $30,000 following his comments last week. We may now see the crypto rally gather pace once more and so I wouldn't be surprised to see more of these kinds of stories cropping up in the coming weeks.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.