STATE OF THE MARKETS
Stocks closed Q1 in red. US stocks fell on Thursday to close the first quarter in red as bonds lost bids, sending yields higher across the board. Dow (-1.56%), S&P (-1.57%), and Nasdaq (-1.54%), including Russell (-1.00%) were under selling pressure to cash out as bond buyers stayed on the sideline. Yields inversion between 3Y (2.51%), 5Y (2.46%), 7Y (2.44%) with 10Y (2.36%) and 30Y (2.45%) remains while the 2Y stalled at 233 basis points. The rush to cash was evident as the Dollar index jumped back above 98.50 at writing.
In the commodities market, crude fell to around $100.30/bl after news hit the wires that the White House is releasing the US strategic petroleum reserves. Gold and iron ore continue to climb higher as inflation continues to plague the markets. Gold settled above $1,936.80/oz, while iron ore above $150.80/tn.
In the FX space, short and medium term accounts saw return of the Dollar to demand territories alongside Loonie, Euro and Swiss while Aussie and Kiwi were pushed to the back burner. Long term sentiments were unchanged.
On Friday, the war will continue to be in the spotlights while markets look for earnings reports from Charah Solutions (CHRA), Milestone Scientific (MLSS), and NextDecade (NEXT) as well as the very much awaited US non-farm payroll and job markets data.
OUR PICK – No New Pick
No new pick going into the weekend. With the inversion of the yield curves, at the same level of risks, it’s more profitable to invest in the short-term than in the long term. Another week of outflows from US equity (-$2.29 billion) and taxable bonds (-$117 million) going into short-term money markets (+$29.82 billion) proves that investors are in desperate attempts to overcome inflation. We see dividends stocks and commodities to continue to be in demand for the months to come.
Trades updates:
Equities: AUY (18% undervalued, 2.16% yields) was well bid and only break below $5 would suggest further pullback to $4.50, we remain bullish CTRA (COG) (22% undervalued) yielding 2.21%, T (15% undervalued) at 4.60% yields, MO (21% undervalued) at 6.92% yields, VIPS (46% undervalued with 4.79 z-score), CRON (24% undervalued with 27.69 z-score) and WBA (31% undervalued, 4.02% yields).
FX & Commodities: USD/CHF didn’t work out as planned while we remain bullish silver.
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Risk Disclaimer:
This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities/oz. 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.