STATE OF THE MARKETS

Stocks rise ahead of NFP. US stocks climbed higher for the fourth day, with the small cap Russell (+2.43%) leading the gains, after investors saw a less hawkish Fed in the recent minutes. Tech-laden Nasdaq (+2.28%) registered more than 2%, while S&P (+1.50%) and Dow (+1.12%) up more than 1% as bonds lost demand, sending yields of 2Y (3.03%) to 10Y (3.01%) higher back above 3% while the Dollar index was little changed at the 107 handle.

In the commodities market, crude rebounded to close higher above $99.65/bl after news of supply constraints from OPEC and Russia while gold was little changed at around $1,739.75/oz. Similarly, iron ore rebounded to $115.15/tn as short sellers took profit going into the weekend.

In the FX space, sentiments remained mixed as short term traders were quick to bid the oversold Sterling while continuing to bid Loonie and Aussie. Medium term accounts favored Aussie over Kiwi while long term investors favored Sterling over Euro.

On Friday, markets expect to remain cautious while waiting for earnings reports from Lesaka Tech (LSAK) as well as the much awaited NFP numbers and labor market situation in the US.

OUR PICK – No New Picks

No new picks going into the weekend. US equity reported another week of outflow for $3.5 billion while the taxable bond funds reported a meager $111 million of outflows. Apparently, as short term yields rose past 3% recently, smart money was plowing capital into the short term money markets as that segment reported an inflows of $20.4 billion.

Trades updates: 

Equities: VIPS (29% undervalued with 4.73 z-score), T (6% undervalued, 5.25% yields) and CRON (20% undervalued with 27.82 z-score) rebound higher this week as markets look to find its bottom. We still see M (47% undervalued, 3.51% yields) and WBA (31% undervalued, 5.00% yields) offer better opportunities for long term investors.

FX & Commodities: NZD/CHF reached short term TP1 and on the way to TP2.

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