STATE OF THE MARKETS

Dollar surged higher as Feds spooked markets. US stocks tumbled on Tuesday after the Fed’s commentary hit the wires that the Federal Reserve is ready to taper aggressively to control inflation. Dow (-0.80%), S&P (-1.26%) and Nasdaq (-2.26%) including Russell (-2.36%) fell into the red while the Dollar surged past the 99.50 minor handle. Fed’s comment triggered a massive sell-off in the bond markets, sending yields higher, with the shorter 2Y at 2.52% and the 10Y benchmark hit 2.55%.

In the commodities market, crude dipped to the  low of $99 handle, but strong bids manage to close the black gold above the $100/bl mark. Fed’s comment put a dent on gold, but the metal remains above the $1,920 barrier at writing. Elsewhere, iron ore pulled back to $161.25/tn as investors scale back their bids amid Shanghai lockdown.

In the FX space, the comdolls trio continue to show resilient bids across all horizons as the safe-haven Swiss retreated in the medium term accounts. Though King Dollar surged past the 99.50 minor handle, volume was little changed across the board.

On Wednesday, markets await the new sanctions announcement on Russia while looking for earnings reports from RPM International (RPM), Levi’s Strauss (LEVI), Simply Good Foods (SMPL), Tilray (TLRY) and Skillsoft Corp (SKIL) as well as the latest number on US mortgage application index and the much awaited FOMC minutes. EIA petroleum status will be in the spotlight for energy traders.

OUR PICK – No New Stock Pick

The last hurrah in US equities. Looking at the chart of the Dow Jones index, we could not help but notice the zig zag pattern and an upward motive made within the last four weeks. If our count is correct, then we might see the last hurrah in US equities. Given the mid-term election this November, inflation running rampant and the Russia-Ukraine war, there are a lot of uncertainties at play and high volatility is expected. We still favor defensive value stocks and commodities in the months to come.

Risk Disclaimer: