STATE OF THE MARKETS

Stocks mixed as Feds stay put. US stocks ended mixed on Wednesday, with Dow (-0.36%) and S&P (-0.02%) edging lower while Nasdaq (+0.70%) and Russell (+1.51%) climbed higher; after the Federal Reserve announced its stand on monetary policy. Fed chair comment that employment is “not there yet” sent the 10Y yields unchanged around the 1.24% mark and Dollar (DXY) tumbled below 92.50 minor handle.

In the commodities market, crude futures were on firm bids above $72.35/bl after reports showed that US inventories fell sharply more than expected, boosting more outlook for improved demand for the summer months. Dovish Feds put gold back above the $1,800/oz major handle, as investors will not see another meeting until September.

In the FX space, King Dollar lost bids among short and medium term investors as Loonie and Sterling took the lead in demand. Swiss however, remains in bids, signaling cautious investors’ attitude to remain. A better US jobless claims and GDP numbers may provide support for the buck, but any negative surprise would send the world reserve currency lower.

OUR PICK – No New Pick

No new pick as we had three losses in a row. Fed’s decision today is very much expected and Jerome Powell remarks during the press conference sent a dovish signal for the Dollar. Since there will be no FOMC meeting until September, markets would very much depend on economic data to project Fed’s next move.  The general expectation is for King Dollar to remain weak as taper and rate hike are put on hold. At least for the short and medium term. Inflation and employment figures would be on close watch as these two would very much be the trigger for Fed’s move. Rising inflation may float the Dollar but with falling yields, anti-inflationary assets would rise higher too in our view.

Trades updates:  We will continue to accumulate AUY as the stock now pays dividends yielding 2.46% at current price, we remain bullish T and will accumulate as dividends yields now at 7.43%, we remain bullish COG and will accumulate as dividends yields now at 2.77%, we remain bullish CLVS, VIPS while bearish GPRO, APA, and GE. (Note: APA pays 0.53% while GE’s dividend yield is at 0.30% and CLVS, VIPS and GPRO currently does not pay any dividends)

Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.