STATE OF THE MARKETS

Stocks mixed ahead of FOMC minutes. US stocks closed mixed on Tuesday as investors await the release of the latest FOMC minutes that might shed some light on the next path of rate hike. Dow (+0.71%) and S&P (+0.19%) eked minor gains while Nasdaq (-0.19%) and Russell (-0.04%) drifted lower as investors continued to dump bonds, sending yields higher across the board. The 10Y benchmark climbed further near 2.90% as the Dollar index firm near the 106.50 minor handle

In the commodity markets, crude was under pressure as recession fears continue to weigh on the commodity. The black gold settled below $86.70/bl as New York closed. Gold continues to drift lower as short term traders continue on profit taking that saw the metal close around $1775.50/oz after six days of strength. Similar fate continues to plague iron ore that closed lower around $107.30/tn.

In the FX space, overall sentiments seemed mixed as demand for safe haven Yen retreated while Swiss remained elevated with Aussie and Kiwi in the medium and long term accounts. Despite heavy demand for Dollar in the short and medium term, long term investors see a bearish Dollar.

On Wednesday, markets expect another volatile trading while looking for earnings reports from Cisco System (CSCO), Lowe’s Companies (LOW), Analog Devices (ADI), Target Corp (TGT), TJX Companies (TJX), Synopsys (SNPS), Keysight Tech (KEYS) and Amcor (AMCR) as well as the latest numbers on US mortgage application and the retail sales data. EIA petroleum status will be in the spotlight for energy traders as the FOMC minutes will be released at 2:00PM Eastern.

OUR PICK – Yamana Gold (AUY, NYSE)

Less hawkish Feds as inflation eased and GDP contracted. Recent GDP contraction coupled with easing inflation might suggest that the Federal Reserve might be less hawkish in the coming September meeting. Currently the market is pricing a 58% probability of a 50 – 75 basis points hike and any signs of lower inflation numbers will continue to benefit equities and commodities markets on weaker Dollar. Yamana is an alternative to buying more expensive gold contracts for smaller investors which also offers 2.37% dividend yields. However, downside risk remains if Feds continue its aggressive hikes. 

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.