STATE OF THE MARKETS
Stocks continue lower amid safe-haven flows. US stocks continue trading lower on Thursday as flight to safety took the driver seat in an early month end rebalancing. Dow (-0.75%), S&P (-0.58%) and Nasdaq (-0.26%) closed in the red while Russell (+0.08%) managed to eke some gains as Dollar continued to fall and closed below the 103 handle. Yields fell across the board as bond demands increased, with the 10Y benchmark settled around 2.85% as New York closed.
In the commodities market, Dollar weakness sent major commodities higher with crude closed near $109/bl while gold climbed higher to above $1,840/oz. Iron ore however, fell to $132/tn as markets continue to weigh the recent slowdown reports in China.
In the FX space, bearish sentiments may have reached the extreme as Swiss and Yen seized the helm of demand in the short and medium term account, while Swiss overpowered Yen in the long term accounts. Turnaround might be near as Kiwi advances into the short and medium term demand territories.
On Friday, markets may look to scoop some bargains while looking forward to earning reports from Foot Locker (FL), Deere (DE) and Booz Allen (BAH). While there is no high impact US economic data, Baker’s oil rig count might be of interest to energy traders.
OUR PICK – No New Picks
No new picks going into the weekend. The recent market rout has not been kind to many buy-side institutions while the sell-side continue to press lower. Seven weeks of losing streak for the DOW has not happened since the 80s, and we believe that long term investors are looking to scoop some bargains in higher yielding dividend stocks as well as commodities/commodities related stocks.
Equities: We are bullish CTRA (COG) (23% undervalued, 2.06% yields) and maintained target at $35.30, T (21% undervalued, 5.49% yields), VIPS (36% undervalued with 4.78 z-score) remained well bid despite recent Morgan Stanley downgrade to equal weight and reduced price target to $10, CRON (24% undervalued with 27.69 z-score), WBA (29% undervalued, 4.70% yields) and M (47% undervalued, 3.25% yields) offer better opportunity for long term investors.
FX & Commodities: AUD/CHF didn’t work out as planned.
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