STATE OF THE MARKETS

Stocks mixed ahead of FOMC. US stocks closed mixed on Tuesday after a series of upbeat earnings from Uber Technologies (UBER) and Pfizer (PFE) ahead of the FOMC statement on Wednesday. Russell (+0.25%) eked minor gains but the rest – Nasdaq (-0.89%), S&P (-0.41%) and Dow (-0.24%) – were pulled lower as yields rebound across the board with the shorter 2Y note at 4.54% while the 10Y benchmark at 4.05%. The Dollar index mirrored the 10Y yields and closed below the 111.50 minor handle.

In the commodity markets, crude rebounded and erased earlier losses, trying to cling near the $88/bl, after China announced a zero-covid exit plan by March 2023. Gold regained ground after heavy bids amid the tension in the Korean peninsula. The yellow metal settled near $1650/oz as New York closed. Elsewhere, iron ore continues to fall lower, near $80/tn, as markets continue to weigh global recession fears.

In the FX space, short and medium term accounts were seen continuing to bid more safe haven Yen, alongside Kiwi, Swiss and Aussie. Long term sentiments seemed more bullish as Kiwi advanced further in the demand territories while the rest of G7 currencies remained unchanged.

On Wednesday, markets expect to be cautious ahead of the FOMC statements in the afternoon. Underlying breadth was positive, however, meaning markets most likely will rally if Fed’s hike only 50 points or hints on lesser hikes in December. Earnings to watch include CVS Health (CVS), Estee Lauder (EL), Qualcomm (QCOM), Booking Holdings (BKNG), Humana (HUM), Metlife (MET), Equinix (EQIX), Apollo Global (APO) and Suncor Energy (SU) as well as the latest figures in the US mortgage applications and ADP employment. EIA petroleum status will be in the spotlight for energy traders.

OUR PICK – No New Pick

We stay on the side line ahead of the FOMC. As at writing, the market is uncertain on the degree of hike in December though 75 points is already in ink for Wednesday. We decided to stay on the sideline for now.

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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.