Stock markets are making small gains once again on Thursday as investors continue to reap the rewards of remaining positive despite Monday's worrying sell-off.

European indices are all making decent gains with the FTSE breaking back above 7,000 despite underperforming the rest of the region. It would appear investors are not yet buying into the gloomy narrative on Monday that the recent surge in delta cases will drag on the recovery in the last quarter.

Instead, upbeat earnings reports are giving investors a sense of optimism and, while disruptions are likely as a result of the surge, the belief remains that the best is yet to come. Whether that will be sustained if countries impose tighter restrictions is another thing but for now, optimism remains.

A game changer for the ECB?

The ECB meeting has probably been the most eagerly anticipated event this week but whether it will be the game changer the bloc needs seems unlikely. While inflation has returned this year, the permanent nature of it is up for debate and the expectation is that it will fall back again in time, leaving the ECB once again short of its objective.

The strategic review clearly sought to address the persistent problem of significantly undershooting its inflation target for more than a decade. I just wonder whether the changes to its mandate will make any difference. It may allow for a little more easing which could weigh on the currency but whether than will actually make a difference is another thing.

Not to mention the question of just how much overshooting the committee will tolerate should that moment ever come and for how long. The tweaks the central bank have come up with strike me as being very minor in reality. How the central bank reacts today and at its next meeting in September will tell us a lot more about whether this is the game changing moment that's needed or just the same old ECB.

Oil pushing higher on improving optimism

Oil is enjoying another day in the green, with WTI firmly back above $70 and the mid-July malaise seemingly behind us. To climb back above $70 so rapidly after Monday's sell-off was impressive and says a lot about how traders view the dips, something that can be applied more broadly to risk assets.

Even China's reported efforts to take the wind out of the sails of the rise in oil prices appears to be failing, with crude now only around 5% from its early July peak. The recovery trade is clearly still in motion and prices look likely to stay elevated for some time.

Gold falling under pressure of rising yields

Gold is edging a little lower in these risk-on markets, with the yellow metal creeping back below $1,800. Broadly speaking, little has changed, it's continuing to consolidate around $1,800 and showing little sign of bursting out in either direction. Should we continue to see risk appetite that may change, with focus remaining on US yields which continue to creep higher. The US 10-year is closing in on 1.3% and may have its sights set on 1.4% before too long. A move above here would be bad news for gold.

Super Elon

Elon came to bitcoin's rescue once more, helping protect the much-hyped $30,000 level and spur a strong rally in cryptos. I'm sure crypto enthusiasts everywhere were hoping that Musk's appearance at the B Word conference was going to arrest the slump in prices and they won't be disappointed.

In declaring that he personally owns bitcoin, ethereum and dogecoin and that Tesla would likely accept bitcoin once again, having reversed course on the decision a couple of months ago, Musk told the audience exactly what they wanted to hear. Clearly his voice is as powerful as ever and going forward, when Elon talks, the crypto universe will be listening.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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