Taper tantrum avoided

A decent start to trading on Wall Street after the Fed avoided a taper tantrum following its policy meeting on Wednesday.

It was a very balanced performance from Jerome Powell, a reflection of the wide range of views that clearly exist at the central bank. That will be tough to navigate over the coming months but the outcome should be favourable for investors. Tapering is coming but it won't be rushed, a balance that suits the markets.

The committee now has time to better understand the impact the current wave of infections will have, see how the inflation picture evolves and gather more data on the economic recovery that has shown such promising signs.

I think this was the sensible and expected outcome which is why the markets haven't moved in any significant way on the back of it. It's a positive development, equities are a little better off, the dollar a tad softer and US yields have eased slightly. Future meetings won't be so straight forward but I think this was the best outcome for this one.

Earnings back in focus as Amazon looks to get investors back on board

Which leaves investors to focus once again on earnings season. And so far it's been very impressive, with big tech this week once again delivering some knockout figures. Their share prices haven't been rewarded to a large extent, owing to their sky high expectations and various challenges in the months ahead.

Facebook smashed earnings and revenue forecasts but disappointed on future growth, with the company warning of slowing growth in the quarters ahead. While that will have been anticipated to some extent, it seems expectations are being pared back a little. The "metaverse" remains the ultimate goal for the company though and it's that dream that will keep investors on board despite challenges with targeted advertising and restrictions being lifted.

Amazon is up next and given what we've seen this week, it wouldn't surprise anyone to see the company also smash forecasts and keep the party going. At this point, it probably needs to as a failure to do so will probably be punished. But if its various competitors performances are anything to go by, I can't see there being a problem. The question is how bullish will they be in their outlook as that's been the downfall for many others.

US data disappointed ahead of the open, with advanced second quarter GDP rising only 6.5%, against expectations of closer to 8.5%. Although this was due to a drop in inventories so nothing to be too concerned about. At the same time, initial and continuing claims came in slightly higher than expected. That certainly justifies a more patient approach from the Fed though, which may explain the knee-jerk selling of the dollar, although it has since recovered the bulk of the losses.

Oil continues to edge back to previous peaks

Oil prices are continuing to gradually rise on Thursday. Strong earnings and a cautious US central bank bodes well for crude, which saw the rally slow heading into Fed day. Oil is now closing in on its early July high so we could see the rally slow in the coming sessions after a remarkable bounceback.

The price plunged around 15% in the two weeks that followed the peak but most of this lost ground has now been made up again. The biggest downside risk to oil prices now is unsurprisingly the delta variant rapidly spreading and weighing on the economic recovery going into the end of the year.

Gold breaks higher after the Fed

Gold saw some support in the aftermath of the Fed meeting on Wednesday but a breakout today has seen it really gather upward momentum. Now back well above $1,800 and with its sights set on the July peak around $1,833, things are about to get interesting again.

This falls around the 50 fib - June highs to lows - with the 61.8 fib falling just above $1,850. Should we get that far, this will be the big test. A break of this could be very bullish in the near-term for the yellow metal. With the dollar a little soft and the Fed keeping yields low, gold could get some love once more.

Bitcoin stalls ahead of potential breakout

Bitcoin is a little flat today, struggling once more around $41,000 as it looks to capitalize on the positive momentum of the last week. We're probably just seeing a little profit taking at an interesting technical resistance level because of how we traded here late-May and mid-June.

It feels like there's a lot more momentum behind it this time which may ultimately see it smash through here and eye much higher levels not seen for a few months. There isn't a huge amount of substance behind the move but we've seen that plenty of times before and it's not held it back then.