STATE OF THE MARKETS
Stocks rally amid safe haven flows. US stocks rallied on Tuesday after news of gasoline tax holiday, though flight to safety was noted with the falling bond yields. Nasdaq (+2.51%) jumped the most, followed by S&P (+2.45%), Dow (+2.15%) and Russell (+1.70%) while the 10Y benchmark fell to 3.21% at writing. The Dollar index dropped to 103.95 before bidders emerged and settled higher around the 104.45 mark.
In the commodities market, crude was under profit taking but remained resilient and settled around $109.25 as New York closed. Gold continues to be under pressure as markets expect more hikes from the Feds. The precious metal closed lower around $1,832.65/oz. Similarly, iron ore tumbled into $133.50/tn.
In the FX space, markets remain cautious as Swiss demand continues to reign across all horizons, though Loonie and Sterling lead in the short term accounts. Sentiments seemed mixed as medium to long term accounts continue to bid Kiwi and Euro.
On Wednesday, markets expect to remain cautious in the rally as major indexes run into resistance soon. Earnings reports to watch include H.B. Fuller (FUL), Korn Ferry (KFY), KB Home (KBH), Worthington Industries (WOR), Winnebago Industries (WGO) and Steelcase (SCS) as well as the latest figures in US mortgage applications. The EIA petroleum status report will be in the spotlight for energy traders.
OUR PICK – No New Pick
We stay on the sideline. Recession fears continue to plague the broad market right now as yields inversions are getting worse. As at writing, the 3Y (3.27%), 5Y (3.28%) and 7Y (3.29%) yields more than 10Y (3.21%) while the 30Y stood at 3.29%. Markets currently expect another 75bps hike in July as Fed Watch sees a 98% probability of such a move. We expect another leg down as major indexes run into resistance soon. We decided to stay on the sideline for now.
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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.