STATE OF THE MARKETS

Stocks clouded with bearish divergence. US stocks had a rough Monday after heading higher last Friday on expected inflation reading. Dow (-0.89%), Nasdaq (-1.39%), S&P (-0.91%) and Russell (-1.42%) traded lower with bearish divergence as long term investors continue to cash out ahead of the FOMC meeting this Wednesday. Bonds were in demand, sending yields lower, with the 10Y benchmark falling to 1.42% as the Dollar (DXY) climbed to 96.30 mark.

In the commodities market, crude slipped to $70.50/bl before bidders emerged to close the black gold around $71/bl as demand concerns remained amid contagious Omicron. Gold continued to be bid above $1,780/oz as traders positioned themselves ahead of the FOMC meeting. Elsewhere, iron ore surged to $108.50/tn as reports of increasing demand from China Steel Mills.

In the FX space, Long term sentiments turned more bearish as Loonie flipped to offers while Sterling to demand. Short and medium term traders seemed less bullish as Swiss and Yen seized the helm of demand from Sterling and Dollar. On Tuesday, markets look for earnings reports from Aspen Group (ASPU), CleanSpark (CLSK) and SkillSoft (SKIL); as well as US producer price index to further gauge inflation impact.

OUR PICK – No New Picks

We remain on the sidelines for now. With our short in GBP/NZD failing, we also see higher volatility ahead of the FOMC meeting on Wednesday. Markets expect Feds to speed up tapering and ready for an early hike next year. PPI figures may give clues to how persistent this inflation will be and in the meantime we see strong buying interest in metals and mining stocks. Dollar may retreat if Feds sounded less hawkish and algo is ready to sell the news.

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This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities/oz. 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.