STATE OF THE MARKETS
Dollar rose amid safe-haven flows. While US stocks closed in the negative on Wednesday, The Dollar index continued to rise after reports of hotter than expected inflation (8.3% vs 8.1%). Dow (-1.02%), S&P (-1.65%), and Nasdaq (-3.18%) including Russell (-2.48%) tumbled further amid fears over more rate hikes.
The Dollar index closed above the 104 handle and surged to 104.60 at writing as yields continue to fall amid higher than usual bond demand. The inversion remains between the 7Y (2.95%) and 10Y (2.92%) signaling a fear of recession.
In the commodities market, despite Dollar strength and increased in inventories, crude rebounded and closed above $104.15/bl after news of reduced flow to Europe and Russia’s sanctions on some European gas companies. Gold struggled to close above $1,852.20/oz as Dollar strength continued to weigh on the metal. Elsewhere, technical traders bid the oversold iron ore to close the commodity higher around $134.25/tn as New York closed.
In the FX space, sentiments are more bearish as Yen and Dollar reign in the front of demand in the short and medium term accounts. Long term sentiments were unchanged.
On Thursday, markets continue to look for new development of European sanctions on Russia, while waiting for earnings reports from Motorola (MSI), US Foods (USFD), Brookfield Asset Management (BAM), Constellation Energy (CEG), Nice Ltd (NICE), WeWork (WE) and Algonquin Power & Utilities (AQN) as well as the latest US jobless claims and PPI final demand.
OUR PICK – No New Pick
We decided to stay on the sideline. Given higher than usual volatility right now, we decided to stay on the sideline.
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