STATE OF THE MARKETS

Safe-haven flows continue. Though US stocks continue to climb higher on Thursday, demand for bonds and haven currencies remain elevated after news of worse than expected contracting US GDP. Dow (+1.61%), S&P (1.99%) and Nasdaq (+2.68%), including Russell (+2.17%) closed in the green as yields fell lower on bond demands with the 10Y benchmark under pressure at 2.75% and the Dollar index fell lower to 101.50 at writing.

In the commodities market, crude jumped to close above $113/bl as markets expect tight supplies given the summer driving season. Gold was little changed under firm bid above $1850.50/oz as profit taking continued towards month end. Elsewhere, iron ore dropped below $133/tn as markets see slowing demand amid global growth concerns.

In the FX space, overall sentiments seemed bearish as Swiss advanced further in long term demands while Aussie, Kiwi and Loonie were sent to offers across the board. King Dollar was seen synching on offer in short and medium term accounts.

On Friday, markets may look to scoop some bargains while looking forward to earning reports from Big Lots (BIG), BIT Mining (BTCM), Canopy Growth (CGC), Hibbett (HIBB) and Pinduoduo (PDD) as well as the latest numbers on US personal income and consumer sentiments.

OUR PICK – No New Picks

No new picks going into the weekend. Another week of outflow from US equity for $4.6 billion despite the rebound. Smart money is channeling funds to short term money markets with $42 billion to take advantage of the higher coupon rate. We still believe that long term investors are waiting to scoop some bargains in higher yielding dividend stocks as well as commodities/commodities related stocks.

Trades updates: 

Equities:  CTRA (COG) (23% undervalued, 2.06% yields) reached target at $35.30; we remain bullish T (10% undervalued, 5.21% yields), VIPS (35% undervalued with 4.78 z-score) remained well bid despite recent Morgan Stanley downgrade to equal weight and reduced price target to $10, while CRON (24% undervalued with 27.69 z-score), WBA (28% undervalued, 4.70% yields) and M (47% undervalued, 3.25% yields) offer better opportunity for long term investors.

FX & Commodities: EUR/JPY reached short-term TP2/medium term TP1.

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