Earnings give cause for optimism
We’re seeing decent gains in stock markets again on Wednesday, with the strong sell-off at the start of the week not quite the deterrent some feared.
To put things into perspective, we’re basically back at Friday’s close but importantly, we are seeing real resilience after a troubling start to the week. The Delta variant remains an ever-present downside risk for the markets in the near-term but as long as inflation remains only a temporary problem, it also keeps central bank hawks at bay. And we know how investors love that.
Momentum has been easing as we’ve moved into the summer so it’s perhaps no surprise to see a small corrective move on the back of some negative Covid headlines. The fact that the FTSE held above 6,800 is encouraging, a close back above 7,000 would be even more so after just falling short today. But even in the absence of that, there doesn’t appear to be anything to panic about at this stage.
Earnings season is off to a solid start, with results beating bumper expectations in the second quarter. The positivity that’s driving is clearly offsetting fears about another wave for now, aided no doubt by belief in the vaccine to stop surges turning into severe lockdowns in most cases.
Bitcoin’s resilience paying off
Bitcoin’s resilience on Tuesday appears to be paying dividends, with the cryptocurrency making strong gains and back above $30,000.
Whether that will last or inspire further gains, we’ll have to wait and see. The trend prior to the breakout wasn’t favourable so the path of least resistance still looks below but a move above $32,000 could be an encouraging sign.
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