Europe

Fed and earnings bring cautious optimism

Craig Aram

A quiet start to what will be a vibrant week in the financial markets. In particular, Big Tech will report earnings, focusing on the United States, where the Fed will meet on Wednesday.

The stock market is a bit green and a fair amount of straws are back in action.

Earnings aren’t as bad as feared, and the Federal Reserve is 75 basis points And China’s plans to avoid the next wave of the real estate crisis are one of the reasons for the rise in the stock market. It all seems a little desperate.

We need to win a small win, but none of the above shouts at me for recovery.

The stock market cannot fall forever, but the recent bear market rebound seems to be driven by as many finger crossings as before. There may be some nasty surprises ahead of testing the bottom foundations of the latest market.

If things don’t go according to plan, these foundations can be shaken in the next few days.

The Fed hasn’t pressed the panic button yet and expects it to rise 75 basis points. This shows a very aggressive tightening path this year as well. But they may show in September that there is another possibility. The market now has it as a coin toss.

I’m not sure if that’s enough to send the stock market to another spiral.

It can be emotional, but it can depend on how much Microsoft, Alphabet, Meta, etc. have to say. I don’t know if emotions can take the combination of disappointing earnings and the more aggressive Fed.

We all need to enjoy what is shaped to be a relatively gentle start to the week. The next few days will be full and by the weekend you will have a better idea of ​​whether the United States is heading into recession, as it is here in Europe.

Oil holds less than $ 100

Oil traders are looking to many of the same events this week as they seek to better understand the economic threats facing the United States and other countries around the world.

The recession is Crude oil price That’s the only one below $ 100 in the short term.

I’m skeptical of the magnitude of the downside risk, but this week’s faster Fed tightening and disappointing earnings reporting could cause further weakness in the oil market.

Even if the possibility of a recession increases, the tightness of the oil market cannot be ignored. Sustainable breaks with barrels below $ 90 still look like a big challenge. If that happens, it will be a little double-edged sword.

Gold recovers and faces great challenges

Gold continues to recover and yields remain well below highs, setting for a rise on the third day. The US decade is not far from the three-month low, with 2.75% appearing to be a potentially significant level. This is because it has been rising repeatedly since that time.

It will be interesting for gold traders as it may suggest that the recovery is already at the borrowed time or is about to get going.

We may have to wait to see which the Fed will be on Wednesday. The impact of the recession of that behavior is key to the outcome.

Do you make or break Bitcoin?

Not surprisingly, some may be excited about the price behavior we see. Bitcoin Over the past few weeks. The six-week highs come from trading less than $ 20,000, and recent pullbacks are very modest.

It’s probably a sign of bullishness in the short term, but it’s still too early to say if it has legs.

And, as with any other asset, the Fed can achieve or destroy recovery.

 

Craig Erlam is a Senior Market Analyst in the UK and EMEA. OANDA

Opinions are those of the author and not necessarily those of OANDA Global Corporation or its affiliates, subsidiaries, officers or directors. Leveraged trading is risky and not suitable for everyone. Losses can exceed investments.

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https://www.financialmirror.com/2022/07/25/fed-and-earnings-bring-cautious-optimism/ Fed and earnings bring cautious optimism

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