STATE OF THE MARKETS

Stocks mixed amid rising yields. US stocks closed mixed on Thursday as short term traders continue to cash out going into the weekend. Bonds were sold off, sending yields higher, while the Dollar index was little changed at the 105.20 barrier. Dow (+0.08%) and Russell (+0.31%) eked minor gains while Nasdaq (-0.58%) and S&P (-0.07%) drifted lower. Yields were notably higher, with the 1Y (3.25%), 2Y (3.23%) and 30Y (3.17%) floating above the 3% mark while the 5Y (2.99%) and 10Y (2.89%) remained below.

In the commodity markets, crude climbed further to close higher above $93.30/bl after EIA projected a  growing demand amid some gas to oil switching in some European countries amid the Russian gas ban. Gold was little changed, trading in a tight range of $1800 – 1780/oz. Dollar weakness helped buoyed iron ore back to $110.40/tn as New York closed.

In the FX space, overall sentiments remain bullish as Kiwi and Aussie reign in the helm of demand across all horizons while demand for Swiss and Yen retreated to the back burner. Short term traders were seen quick to sell Sterling as it approached the overbought levels.

On Friday, traders may look to cash some profits ahead of the weekend as the calendar is light with only earnings reports from Broadridge Financial (BR) and Spectrum (SPB). Investors might be interested in the consumer sentiments as well as the import and export prices to further gauge the inflation impact after PPI data showed that inflation may have peaked.

OUR PICK – No New Picks

No new picks going into the weekend. Smart money continues to liquidate long term holdings and may try to minimize loss as the week saw another outflow (-$1.7b) in equities and moved into bonds safety (+$3.8b). Short term money markets (-$11.9b) experienced another week of outflow on maturities. We noticed heavy blocks moving into precious metals and crude oil given the distressed commodity markets that may spur some speculation to move them higher.

Trades updates: 

Equities: VIPS (36% undervalued with 4.73 z-score), M (48% undervalued, 3.44% yields) and WBA (32% undervalued, 4.81% yields) climbed higher this week as risk sentiments improved. We still see  T (14% undervalued, 6.16% yields) and CRON (20% undervalued with 27.82 z-score) 0ffer better opportunities for long term investors.

FX & Commodities:  GBP/CHF  was stopped out after reaching short term TP1, AUD/CAD has reached long term TP1, XAU/USD has reached medium term TP2, AUD/JPY was stopped out and we remain bearish GBP/JPY and CAD/JPY. 

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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.