Wednesday trading starts in a relatively calm mood.
After the gap-filled open on Monday, markets quickly stabilized, and since then, there hasn’t been much disruption. This week feels quiet so far, at least on the surface.
What’s important today is the start of the earnings season. Reports from Bank of America and Morgan Stanley will set the tone, especially for the financial sector. Their results may give us a better sense of how strong the underlying economy really is.
Looking at the broader market, indices have been pushing higher. The past few days have been very strong, with a clear bullish momentum. At the start of the European session, we are seeing a small pullback, but for now, it looks more like a natural correction after gains rather than a trend reversal.
On commodities, oil is telling an interesting story. After opening the week with a gap, it has now closed that gap and is moving lower. This suggests that the market is pricing in a potential de-escalation of tensions with Iran. Lower oil prices often reflect easing geopolitical risk, and that seems to be the case here.
On the currency market, the Australian dollar is showing strength, while the Japanese yen is clearly weaker. That combination typically points to a more risk-on environment.
The macro calendar is light today. We don’t have any tier-one data releases, but we will hear from several central bankers speaking at the International Monetary Fund spring meetings in Washington, D.C..
Also worth watching is an interview with Donald Trump on Fox News. As usual, his comments can quickly shift market sentiment, so traders will be paying close attention.
For now, the tone remains positive, but after such a strong move on indices, a short-term correction wouldn’t be surprising.