STATE OF THE MARKETS

Stocks rallied further as the Dollar fell. US stocks climbed higher on Tuesday after a series of upbeat earnings from General Motors (GM), Coca Cola (KO) and a few other heavy weights. The small cap Russell (+2.73%) climbed the most, followed by  Nasdaq (+2.25%), S&P (+1.63%) and Dow (+1.07%) as weaker economic data pulled yields and the US dollar lower. Sentiments were mixed as flights to bond safety sent yields lower across the board, with the 10Y benchmark eased to 4.05% while the Dollar index fell below the 110 handle as at writing.

In the commodity markets, Dollar weakness helped buoyed major commodities with crude stabilizing at $84.60/bl while gold was well supported above the $1650/oz level. Elsewhere, iron ore continues to flirt around the $94.50-60/tn waiting for the next catalysts to the next move.

In the FX space, short and medium term accounts were seen synching in bids and offers, signaling a shift in trend as the safe haven Yen, Swiss and Dollar were sold off. Sentiments seemed bullish as long term accounts demand more Kiwi and eased in Swiss and Yen. Strong demand was seen for Sterling as the new Prime Minister promised to fix the economic crisis.

On Wednesday, markets expect to be cautious as any disappointing earnings and downbeat guidance may drag the major averages lower. Investors hope the Fed’s pause on rate hikes may send equities higher but risk averse investors were seen buying more bonds as yields hit 4%. Earnings to watch include Meta Platforms (META), Thermo Fisher (TMO), Bristol-Myers Squibb (BMY), Automatic Data Processing (ADP), Boeing (BA), Service Now (NOW), Waste Management (WM), General Dynamics (GD) and Ford Motor (F) as well as the latest figures in the US mortgage applications and new home sales. EIA petroleum status will be in the spotlight for energy traders.

OUR PICK – Crude Oil

Medium term strength. We see OPEC+ decision to cut supply at a time of rising inflation will continue to float crude oil prices in the medium term. Though the US is considering SPR release and raising sanctions on Venezuela, we see the effects have limited benefits.

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