STATE OF THE MARKETS
Stocks tumble, Dollar spike ahead of CPI. US stocks tumbled on Thursday as investors weighed the sticky inflation factor that can escalate to stagflation as the yields curve inversion remains. Tech-laden Nasdaq (-2.75%) fell the most, followed by S&P (-2.38%), Russell (-2.12%) and Dow (-1.94%) while cash demand spiked the Dollar index past the 103.20 barrier. Treasuries demand are seen more into the longer dated 30Y (3.17%) than the shorter maturities.
In the commodities market, Dollar strength sent major commodities lower with crude settled lower around $119.45/bl while gold at around $1,847.60/oz. Elsewhere, iron ore suffered a similar fate and fell to $143.60/tn.
In the FX space, King Dollar seized the helm of demand in the short and medium term accounts as Euro and Loonie retreated to offers in the short term. In the long term accounts, Dollar and Sterling flipped to demand while Aussie and Kiwi flipped to offers, signaling a turn in sentiments.
On Friday, markets may look to scoop some bargains as the thin calendar only bears the earnings report from UP Fintech (TIGR) and the much awaited May CPI.
OUR PICK – No New Picks
No new picks going into the weekend. Another week of outflow from US equity for $2.7 billion and $2.8 billion out of the taxable bond funds. Smart money is channeling funds to short term money markets with $24.3 billion to take advantage of the higher coupon rate. With bond yields crossed into the 3% mark, investors may look into treasuries though real yields remain negative as inflation looms higher.
Trades updates:
Equities: We remain bullish T (11% undervalued, 5.32% yields) while VIPS (29% undervalued with 4.78 z-score), CRON (24% undervalued with 27.69 z-score), WBA (29% undervalued, 4.58% yields) and M (47% undervalued, 2.63% yields) offer better opportunity for long term investors.
FX & Commodities: EUR/CHF has reached long term TP2, EUR/USD has reached medium term TP1 on re-entry, AUD/USD has reached short term TP1 and stops moved to breakeven (BE).
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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.