STATE OF THE MARKETS

Stocks bounce on thin volume. US stocks climbed higher on Thursday after news of downbeat unemployment claims that may hold the Federal Reserve to a less aggressive hikes plan. Nasdaq (+2.59%) and Russell (+2.57%) jumped more than 2% while S&P (+1.75%) and Dow (+1.05%) more than 1% as the shorter 2Y yields holds above 4.38% while more demand in the longer 10Y sent yields lower to 3.82%. The Dollar index pulled back slightly below the 104 handle.

In the commodity markets, crude dropped to the low of $76.85/bl on demand concerns but bidders emerged to settle the black gold higher, near $78.70/bl, as New York closed. Gold continues to be in a tug of war as buyers continue to push the metal back to the $1,820/oz barrier as the Dollar weakened towards year end. Elsewhere, iron ore rebound to near $111/tn as investors see rising demand from China re-opening.

In the FX space, most players were into short term trading as little changes were noticed in the medium and long term accounts as the year came to an end. Yen and Aussie were flipped to demand alongside Swiss and Euro, while Sterling and Kiwi were flipped to offer alongside Loonie and King Dollar.

On Friday, markets may once again try to push the major averages higher as tax selling ended. Most investors however, more than likely to stay on the sideline to ponder upon the worst market performance since 2008. No significant earnings releases were scheduled other than the Chicago PMI that is expected to rise to 40 from 37.2 points.

MFM Team wishes our readers Happy New Year and may 2023 bring the best in you!

OUR PICK – No New Picks

No new picks going into the weekend. US equities (+$122 million) reported a second week of small inflows this week, together with money markets (+$20.6 billion) as short term yields r0se; while outflows remained in bond funds (-$5.4 billion). As we had seen earlier, it was a small amount to initiate a broad base Santa Rally but more flows were seen into ETFs like Invesco QQQ Trust (QQQ) and iShares Core High Dividend (HDV). We see 2023 as a year of consolidation for equities with more funds flowing into select sectors and commodities as markets venture into new growths.

Trades updates: 

Equities:  While SQ (about 10% overvalued with 4.96 z-score), M (42% undervalued, 3.08% yields), CRON (30% undervalued with 23.21 z-score), VIPS (34% undervalued with 3.92 z-score) ) and T (about fairly valued, 6.02% yields) continue to climb higher this week; AUY (13% undervalued, 2.14% yields) and WBA (12% undervalued, 5.12% yields) retracted in bids as profit taking continue to pull the stocks lower.

FX & Commodities:  We have closed AUD/USD on small profits and taken a loss on XAU/USD, while crude oil reached TP1 and new stop is at $76.25/bl.