It has been another big day for trading across equity, commodity and currency markets with significant news driving market action across multiple markets. 

Starting with stocks, the Dow reached a new all-time high today but it’s was a good news / bad news situation. As the bull market has progressed, advances have been concentrated in fewer and fewer big cap stocks. The NASDAQ, for example was propelled higher by 5 big technology names. Making the case of bad breadth even worse, today’s Dow rally was all attributable to one stock, Boeing, which rallied on the back of positive earnings and guidance. A lot of other companies also reported positive earnings today, and oil rallied again, but the S&P 500 was unable to break out to a new high, suggesting the bull market may be near exhaustion. 

Similarly, Facebook, one of the FAANG big 5 tech companies, beat the street on earnings by a wide margin. Despite this apparent good news, the NDAQ 100 hasn’t moved at all indicating that a strong report was already priced in, just like we saw in Google earlier in the week. 

Crude oil rallied for a third straight day Wednesday, this time on the back of another bullish Us inventory report. DOE oil inventories fall by 7.0 mmbbls, way more than the 3.0 mmbbl drawdown the street had expected, confirming yesterday’s big 10.2 mmbbl decline in API inventories. With inventories falling, comments on exploration and development activity in Big Oil earnings reports due later in the week could keep trading in energy markets active. For now, this means it could be another active day for trading in Australian resource stocks. 

Currencies were jolted out of their morning slumber by the FOMC decision and statement. Where there were no surprises in the decision to hold rates and the statement, traders latched on to the comment that the Fed would start normalizing its balance sheet “relatively soon”. 

It appears that some dreamers were expecting the Fed to commit to a September start and a December rate hike and ended up disappointed.  I have been saying all year however, that with a big budget battle and potential government shutdown over the debt ceiling looming, the Fed isn't going to want to commit to anything for September. Anyways, the USD selloff sparked a big turnaround in gold and ignited rallies in NZD (which has broken out over $0.7500) and AUD (which is testing $0.8000) along with GBP, SGD, CAD, JPY and other markets.

 

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