Comment from David Jones, Chief Market Strategist at European investment trading platform, Capital com, that Fed announcement leaves little imprint as Capital.com traders continue to buy the dip this week.
Q2 2021 hedge fund letters, conferences and more
No Majopr Changes After Fed Announcement
30 July 2021 – It was something of a waiting game for traders this week, with all eyes on the monthly US central bank announcement on interest rates – and more importantly any hints that it would unveil the US Federal Reserve’s (Fed) view of the state of the US economy. There was nothing too momentous from the announcement in the end. It appears that the Fed is going to wait until the economy improves further but the time for tapering its monetary support seems to be getting closer.
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The ACAP Strategic Fund’s managers see a “significant scarcity of attractive asset allocation choices globally,” but also a strong environment for fundamental stock picking. Q2 2021 hedge fund letters, conferences and more According to a copy of the fund’s second-quarter investor update, which ValueWalk has been able to review, its managers currently hold a balanced Read More
One market that didn’t wait for the announcement before sparking into life was cryptocurrencies. Spurred along by a rumour that Amazon was going to start allowing crypto payments, Bitcoin jumped by 30% over the past week and traded at levels not seen for over a month. So far, these gains have been held onto, despite Amazon stating that the rumour was not true. While volatility is usually welcomed by traders, I am not sure the surge in crypto over the last week has really changed the landscape that much. Following the crash that started in April, Bitcoin has been stuck in a two-month sideways range, capped at around the $42,000 level. If this level gets taken out – and there have been two attempts in recent months that have failed – then perhaps we will go back to the days of the “fear of missing out” trading, and cryptos get exciting once more.
S&P 500 Hits All-Time Highs Yet Again
Once the Fed announcement was out of the way, it was business as usual for stock markets. Thursday saw the broad-based S&P 500 push out yet again to fresh all-time highs. In line with a wider trend we have seen for most of the month, after a brief sell-off, traders took yet another opportunity to buy the dip and move out to record levels. It is said that bull markets climb a wall of worry with investors expecting a possible crash to be just around the corner. No market goes up forever but US stocks, for now at least, look like they could possibly keep their momentum as the month comes to an end.
Weakness in the US dollar lifted other markets after the Fed announcement. The pound hit its best levels in more than a month and even gold caught some momentum with US dollar weakness and the threat of increased inflation providing some traders with a couple of reasons to buy in. But I would not write off the US dollar just yet. The dollar index – the greenback against a basket of world currencies – is still up year-to-date and if inflation continues to be a concern or stocks start to lose some of their shine, we could potentially see it swing back into favour as a safe haven destination.
Capital.com is a high-growth investment trading fintech group of companies empowering people to participate in financial markets through secure, low-friction, innovative platforms that take the complexity out of investing. Its intuitive, award-winning platform, available on web and app, offers investors a seamless trading experience to over 3400 world-renowned markets. To help investors trade with confidence, the platform is enabled with robust risk management controls and transparent pricing while its all-in-one Investmate app delivers extensive financial lessons and educational content to support clients in their investment journey.
Capital.com Group has clients in over 180 countries with offices located in the UK, Gibraltar, Australia, Cyprus and Belarus. In 2020, the platform reported a 700 per cent growth in its client base, making it one of Europe’s fastest growing investment trading platforms with more than 2million clients.
Capital Com (UK) Limited is authorised and regulated by the Financial Conduct Authority (FCA). Capital Com SV Investments Limited is authorised and regulated by the Cyprus Securities and Exchange Commission (CySEC), under license number 319/17.
To find out more, please visit: www.capital.com