By Greg Peel

The Dow fell 40 points or 0.3% while the S&P lost 0.2% to 1722 as the Nasdaq gained 0.2% on a 1.6% gain for Apple.

No one would have groaned louder yesterday on hearing the Fed's anti-decision than RBA governor Glenn Stevens. Now that the dust has settled, plenty on Wall Street are suggesting that no, they weren't actually expecting the Fed to taper given the US data had eased off somewhat since June. On that basis it would seem the Fed's non-move is justified but Stevens would no doubt have been hoping the Aussie dollar was about to fall (on a stronger greenback) without any required assistance from monetary policy.

Weaker data aside, the other primary suggestion is that the Fed tested the bond market waters by hinting at tapering just to see what the response might be. The US ten-year yield was around 2% in June but shot up to 3% on tapering expectations. This was perhaps too strong for the Fed, while a move to only 2.5% might have been tolerated, it has since been suggested. The opportunity was there, nevertheless, for the Fed not to be seen as deliberately confusing markets and simply tapering by a small amount and suggesting that will do for now. Bernanke pointed out yesterday he never confirmed the Fed would start tapering but by letting Wall Street think exactly that, his silence was providing implicit confirmation. Or so everyone thought.

Now talk is that maybe tapering won't even be considered until next year, under a new chairman. But you can bet your bottom dollar markets will be debating, yet again, every other day from here on. The response on Bridge Street yesterday was to push the ASX 200 to a new post-GFC high, following the lead of the S&P 500's run to a new all-time high. Cyclicals led the way. The materials sector was the winner with a 2% plus gain. Energy, industrials, banks and consumer discretionary all added around 1%. Defensive sectors managed moves of only 0.5% or less, except consumer staples, which remained flat.

The good news is the slight corrective pullback on Wall Street last night has seen the US dollar index rebound 0.3%, and the Aussie fall 0.8% to US$0.9442. Bridge Street carried on yesterday like a stock market discounting above-trend Australian GDP growth, when in fact GDP growth is below-trend and falling. An Aussie back above 95 is a potential death knell, except that Bridge Street now expects the RBA will have to cut again ? if not next month then definitely on Cup Day, which is becoming a bit of a tradition. Asset bubble?

Ongoing Fed QE is good for commodity prices, and good for emerging market investment, which in turn flow through to strength in Australian resources stocks. The gain in the materials sector yesterday confirmed this, as did last night's moves on the London Metals Exchange. The roller door was just coming down on the LME on Wednesday night just as the Fed statement was issued, so last night's trading provided the true, delayed reaction. Aluminium, copper and lead rose 2%, nickel 3% and tin and zinc 1%. China is on holidays, so spot iron ore is unchanged at US$131.70/oz.

Over on the ICE and the Nymex, oil traders were able to sleep on Wednesday's night's big rebound in crude prices. The Fed not tapering meant a slower than assumed economic recovery, they realised. Bugger. Last night Brent fell US$1.99 to US$108.68/bbl and West Texas fell US$1.66 to US$106.41/bbl, all but reversing Wednesday night's gains.

Having leapt fifty bucks on Wednesday night, last night gold was steady at US$1366.30/oz.

The SPI Overnight fell 14 points or 0.3% on the new December front-month contract.

The question now is: How far can we run before it's too far? Will the absent retail money now appear, or will it be scared off by too high prices?

Today on Bridge Street has "Friday" written all over it. Get your lunch bookings in promptly. China is on holiday again. It's the quadruple witching expiry on Wall Street tonight. Oh and Angela Merkel is expected to waltz it in on Sunday. But then the Fed was expected to taper...