STATE OF THE MARKETS

Stocks tumbled ahead of the holiday weekend. US stocks were sold off on Thursday after news of an upbeat economy that may force the Federal Reserve to stay on rate hikes for longer. The tech-laden Nasdaq (-2.18%) fell the most, followed by S&P (-1.45%), Russell (-1.29%) and Dow (-1.05%) as yields jumped back up ahead of the holiday weekend. The shorter 2Y yield climbed back to 4.28% while the 10Y benchmark rose to 3.69% as investors were seen cashing out, sending the dollar index near the 104.50 minor handle.

In the commodity markets, profit taking and Dollar strength sent major commodities lower, with crude oil pulled back below the $78.20/bl barrier and gold fell near $1,792.05/oz. Similar fate tangled iron ore that edge lower to $110.40/tn as New York closed.

In the FX space, King Dollar seized the helm of demand in the short term accounts alongside Euro and Loonie, while Yen, Euro and Loonie retained the two top spots in the medium and long term accounts. Sentiments seemed to be turning around as Swiss was sent to offer across the board, while demand for Sterling returned.

On Friday, markets expect to continue to be under pressure as investors cashed out and closed their year end book on a short and thin Friday. No significant earnings releases were scheduled other than new home sales, consumer sentiments and the Federal Reserve favored PCE inflation data.

MFM Team wishes our readers Merry X’mas and Happy Holidays!

OUR PICK – No New Picks

No new picks going into the weekend. After a long string of outflows, US equities finally reported an inflows of $3.8 billion this week, while outflows remained in bond funds (-$14.4 billion) and money markets (-$24.4 billion). Year end Santa Rally might be here but as always in the select sectors and value names. Commodities were seeing some outflows this week as we expect profit taking, but to our surprise funds remained flowing into the crypto space despite the bad news from FTX collapse.

Trades updates: 

Equities:  While SQ (about fairly valued with 4.96 z-score), M (42% undervalued, 3.15% yields) and CRON (31% undervalued with 23.21 z-score) pulled back deeper from their recent highs, VIPS (35% undervalued with 3.92 z-score), AUY (13% undervalued, 2.14% yields), T (about fairly valued, 6.08% yields) and WBA (12% undervalued, 4.99% yields) continue to firm in bids.

FX & Commodities:  We remain bearish AUD/USD under 0.6800 and XAU/USD under $1,825.00, while bullish crude oil.

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.