Optimism is here to stay

Stock markets once again made small gains on Thursday as investors continue to reap the rewards of staying positive despite Monday’s worrying sell-off.

The European indices are all making decent gains, with the FTSE rising above 7,000 despite underperforming the rest of the region. It looks like investors are yet to buy into Monday’s grim tale that the recent surge in delta cases will weigh on the recovery in the last quarter.

Instead, bullish earnings reports give investors a sense of optimism, and while disruption is likely due to the upside, belief remains that the best is yet to come. Whether that continues 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 anticipated event this week, but it looks unlikely to be a game-changer the bloc needs. While inflation has returned this year, its sustainability is open to debate and is expected to fall back over time, again leaving the ECB below its target.

The strategic review was clearly aimed at resolving the persistent problem of significantly under-exceeding its inflation target for more than a decade. I’m just wondering if the changes to his mandate will make a difference. This may allow for a bit more easing that could weigh on the currency, but whether it will actually make a difference is another thing.

Not to mention the question of how many exceedances the committee will tolerate if that moment were to come and for how long. The adjustments made by the central bank seem to me to be very minor in reality. The central bank’s reaction today and at its next meeting in September will tell us a lot more about whether this is the game-changing moment or just the same old ECB.

Oil on the rise to improve optimism

Oil is enjoying another day in the green as WTI is firmly back above $ 70 and the mid-July malaise seems to be behind us. Climbing back above $ 70 so quickly after Monday’s sell-off was impressive and says a lot about how traders view dips, which can be applied more broadly to risky assets.

Even China’s reported efforts to take the breath away from the rise in oil prices appear to be failing, with crude only about 5% since its peak in early July. The recovery trade is clearly still on the move and prices are expected to stay high for some time.

Gold falls under pressure from rising yields

Gold is slightly lower in these risky markets, with the yellow metal falling below $ 1,800. Overall, not much has changed, it continues to consolidate around $ 1,800 and shows little sign of bursting either way. Should we continue to see a risk appetite that may change, with the focus remaining on US yields continuing to climb. The US 10-year is approaching 1.3% and could target 1.4% soon. A move above here would be bad news for gold.

Super Elon

Elon has come to Bitcoin’s rescue once again, helping to protect the high-profile $ 30,000 level and spur a strong rally in cryptos. I’m sure crypto enthusiasts around the world were hoping Musk’s appearance at the B Word conference would stop the prices from falling and they won’t be disappointed.

In stating that he personally owns bitcoin, ethereum, and dogecoin, and that Tesla would likely accept bitcoin again, after reversing the decision a few months ago, Musk told the public exactly what he wanted to hear. Obviously, his voice is more powerful than ever and in the future when Elon speaks, the crypto universe will be tuned in.

About Mike Stevenson

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