STATE OF THE MARKETS
Stocks rise as the Dollar under pressure . US stocks rose further on Thursday after big names of Tesla (TSLA), Danaher (DHR) and Philip Morris (PM) reported earnings that beat estimates. Nasdaq (+1.%) climbed the most, followed by S&P (+0.99%), Dow (+0.51%) and Russell (+0.48%) as the Dollar index was under pressure below the 107.50 minor handle. Flights to safety were noted as demand for bonds returned, sending yields lower across the board, with the 10Y benchmark settled back below the 3% mark, circa 2.88%.
In the commodity markets, crude fell further to $94.10/bl before bidders emerged to bid and settled the black gold higher circa $96/bl as demand concerns plagued the European market amid ECB rate hike. Gold rebounded off the $1,680.80/oz low and settled above $1,718.50/oz as global recession worries stoked demand for the safe-haven metal. Elsewhere, Dollar weakness sent iron ore higher to settle above $105.20/tn as New York closed.
In the FX space, safe haven demand was evident in the short term accounts as Yen and Swiss seized the helm of demand while inching closer to the demand territories in the medium term accounts. Slight bearish sentiments were noted in the long term accounts as the Dollar pushed a notch in demand while Euros were sold to Yen despite the ECB rate hike.
On Friday, traders may look to cash some profits ahead of the weekend while waiting for earnings results from Verizon (VZ), Nextera Energy (NEE), American Express (AXP), HCA Healthcare (HCA), Schlumberger (SLB), Roper Technologies (ROP) and Twitter (TWTR). Markit manufacturing and services PMI will be in the spotlight for investors to assess the health of the US economy.
OUR PICK – No New Picks
No new picks going into the weekend. Upbeat earnings and pending rate hikes are giving the hope that the US economy might not slip into a recession. However, it should be noted that the earnings are for Q2 and the recent 75 basis points hike was hardly factored into the earning results. Plus another 75 basis points is on the way this month that impact is yet to be seen. $6 billion outflow from equities this week showed that long term investors are not confident in a soft landing and simply move funds ($5.6 billion) to the short term money markets as yields are more attractive in the short than in the long term. The US economy might not dodge a bullet this time.
Trades updates:
Equities: VIPS (34% undervalued with 4.73 z-score) was firm while CRON (20% undervalued with 27.82 z-score) and M (47% undervalued, 3.38% yields) rebound higher as markets look to find its bottom. We still see T (16% undervalued, 5.87% yields) and WBA (30% undervalued, 4.99% yields) offer better opportunities for long term investors.
FX & Commodities: EUR/JPY on the way to short term TP2 on re-entry and AUD/USD didn’t work out as planned.
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Disclaimer:
This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. 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.