With central bank comments out of the way, markets have been left to focus on earnings. Leaving aside a poor run of form for tech firms that only got worse with Google and Microsoft last night, the general tone of earnings season has been positive. Having taken out 6600 it seems as if the FTSE 100 is still in the mood to push higher, with today’s losses just being a blip in what looks to be an extended rally.
Aside from Vodafone, investors have been left bereft of corporate results in any meaningful form, and so have turned to defensives as they look to trim positions at the end of a busy week. ARM Holdings has been hit hard by Microsoft’s poor showing last night, but given that Microsoft only has 2% of the tablet market and ARM supplies has most of the rest, the market should not be unduly worried about the outlook for the company.
Fresnillo has shaken off the worst of the morning’s fall, meaning that the company is still up a healthy 4.6% for the week. Such bounces for the company are usually short-lived, however, and the shorters might look to take advantage of the bounce to get back on what has been a sustained downtrend.
Having escaped unscathed through two days of Q&A for Ben Bernanke, investors are just happy to get to Friday in one piece. That said, the outlook in earnings and economic terms looks better, and the market seems much more relaxed about the taper than it was a month ago. Central bank communication is a dark art, but Bernanke seems to be a past master.
For the umpteenth time in recent days, gold is edging back towards $1300 an ounce. The metal still doesn’t seem like it wants to go above this level, and the lack of any real QE-related commentary from Bernanke means that the metal is now becalmed. Like many miners however, gold still seems to be resting before a fresh lurch lower, in which case sub-$1200 comes into play.
The US dollar has failed to build on recent gains today, running into the sand thanks to a lack of data and absence of any fresh news from the Federal Reserve. Over the weekend the main action will likely be concentrated in USD/JPY, where fresh elections loom, but even if the incumbent party fails to make progress it is unlikely to dent the current fixation with fresh easing efforts. Japan has a big mountain to climb to restore its economy, and we are only at the beginning of the process.