Highlights

State of The Markets

Author: MFMTeam   |   Latest post: Wed, 20 Jan 2021, 8:56 AM

 

Stocks Climbed Amid Stimulus Hope and Improved Earnings

Author: MFMTeam   |  Publish date: Wed, 20 Jan 2021, 8:56 AM


STATE OF THE MARKETS

Stocks climbed amid stimulus hope and improved earnings. US equities climbed higher on the back of improved earnings reported by major banks and corporations; fueled by Treasury Secretary nominee Janet Yellen’s statement to the Senate that America need to “act big” to save the Covid ridden economy. The benchmark 10Y yield slid lower, below 1.10%, as more than $68 billion flowed into the Treasury coffer.

The risk-on sentiments, sent crude higher on the hope of improved demand as vaccine roll-out completed by mid-summer. The black gold closed nearly $53/bl with more than $200 million worth of block orders in the futures market. Gold retained bidders as new stimulus raised concerns of rising inflation. The yellow metal advanced higher, breaking $1850/oz, in the early Asian trading, Wednesday.

In the FX space, the greenback took a pullback in the short-term, while remain well supported in the medium-term. The global reserve currency took a step back in the long-term accounts, paving way to Kiwi and Swiss, while remain supported by Yen and Euro.

OUR PICK – Cronos Group (CRON, NASDAQ)

Cannabis is overrated and has a long way to go.  When cannabis was legalized in Canada and certain states in the US, “weed stocks” as they called it, was the craze of the day. Now that with Democrat in control of the House, Senate, and the White House; talk is high that cannabis stocks are making a come back. Indeed, since the beginning of November last year, the sector has rallied massively by 40% to 150%, surpassing the markets 15% return. With Q4 earnings coming in March, we see Cronos making a pullback after bearish engulfing candle on Tuesday, suggesting a sell on rally for the short to medium term with $12 stop. In the long term, however, we see Cronos has a room for further growth.

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.

 

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Global Equities Wobbled as US on Break

Author: MFMTeam   |  Publish date: Tue, 19 Jan 2021, 8:47 AM


STATE OF THE MARKETS

Global Equities Wobbled as US on Break. With the US markets closed on Monday in observance of Martin Luther King Day, European equities lacked intervention and was moving in mixed direction as London closed. UK FTSE closed 15 points lower (-0.22%) to 6,720.65 points while Euro Stoxx50 edged up 3 point (+0.09%) to 3,602.67 points as investors flock to the safety of the Gilts and Bund.

Crude oil futures was little unchanged after the big drop on Friday as investors worried that the corona virus is deadlier than anticipated after new variants were found in Japan and Brazil. The black gold closed below $52.40/bl, while the yellow metal gold was firmly bid above the $1,820/oz despite stronger Dollar.

Dollar saw a notch up in demand in the long term, while gaining momentum in the short-term at the expense of Aussie and Kiwi. Increased in demand for Yen in the short term, showed that optimism is low and flight to safety is on the radar as investors prepare for the new US President inauguration on Wednesday.

OUR PICK – XAU/USD

Gold spot is intact while futures warrant a re-entry. On 13th January, we pick Gold and in the spot market, the stop is intact but it dipped below $1,810 on the futures market ($1,809.65) which was on firm bid. We believe the precious metal is poised to climb higher as $1.2T US stimulus plan eventually approved by Senate. As bulk of this stimulus goes directly to American taxpayers, we expect inflation will eventually creep up and surpassed 2% inflation target as Feds had expected and this should bode well for gold. If you were trading futures, a re-entry on $1,800 stop is warranted while shall it dip below $1,810 on spot, we would re-enter as well as we see recent dip was more of a liquidity hunting.

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.

 

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Equities Retreated on Waning Optimism

Author: MFMTeam   |  Publish date: Fri, 15 Jan 2021, 8:52 AM


STATE OF THE MARKETS

Equities retreated on waning optimism. Global equities were mixed with major stocks indexes retreated lower after report on jobless claims in the US was worst than expected. Though markets cheered the fresh $1.9T stimulus plan from Joe Biden administration, rising cases of covid-19 globally and new variants discovered in Japan and Brazil, brought the fear and greed index lower. More than $256b flowed into the shorter US 5Y bond as investors were concerned on the long term. Yield for the 10 year rose to 1.13% as price fell.

The waning optimism however, was rebalanced with bullish signs from Chinese import data; which drove crude higher to close above $53.55/bl, while the yellow metal gold remain well bid above $1,845/oz as the greenback drove lower post Fed Powell speech of accommodative monetary policies.

The Feds chairman reassured that the US central bank is not raising rates anytime soon or reducing its bond purchases in the near term, which weigh heavy on the Dollar. Commodity currencies were back in demand for the short-term while medium term accounts were seen on profit taking. Positioning in the long term accounts suggested that Dollar short-covering is going to stay for quite some time.

OUR PICK – No new pick

No new pick going into weekend. Of our three picks this week, GBP/USD was stopped out, Gold and USD/CHF are still in play. We see weaker Dollar in the short term as markets digest the new stimulus plan, while medium and long term technical suggested that Dollar short covering is gaining momentum. Heavy bidding in the bond markets, as investors seeking higher yield might continue to buoy Dollar in the medium term.

 
 

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.

 

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Markets Mixed on Hedging

Author: MFMTeam   |  Publish date: Thu, 14 Jan 2021, 8:40 AM


STATE OF THE MARKETS

Markets mixed on hedging. Major US equities indexes advanced higher on the back of defensive sectors as investors weighed the political turmoil in Washington against the prospect of a fresh fiscal stimulus plan given rising Covid-19 cases. The S&P 500 and Nasdaq was up 0.23% and 0.43% respectively, while the Dow was slightly down by 0.03%. Hedging was observed as investor bid longer-dated bonds, forcing yields to drop, with the 10Y closed at 1.09% compared to 1.13% the day before.

Crude almost hit $54 when Cushing reports showed more than expected reduced inventories, before settled lower around $52.90/bl as concerns on renewed lockdown plague the commodities markets. Gold struggled to advanced higher but remain well bid, underpinned by the reports of rising inflation and more fiscal stimulus from the Joe Biden administration. The yellow metal closed around $1,842.40, given strength in the Greenback.

The global reserve currency settled higher, above the 90.33 mark, on safe-haven flows as investors weigh the new lockdown in China, Europe and South East Asia. Though the commodity currencies remain in demand for the long term, Kiwi especially has suffered setback in the short and medium term accounts. On another note, Euro was under selling pressure after reports that Italy’s coalition government is on a brink of collapse as disputes between ex-premier Renzi and PM Conte escalated. Sterling remain well bid with Swiss in the short term as investors hedged with the safe-haven on any contingencies.

OUR PICK – USD/CHF

Playing the safe haven battle. Dollar, Swiss and Yen are considered safe-haven currencies. At this point in time, only Dollar comes with positive interest rates 0.25% while swiss at -0.75% and Yen at -0.10%. When the going get rough, Swiss will bid Dollar lower and improved risk sentiments will see Dollar bid higher. Rising momentum and G8 currencies sentiments suggested that medium and long term accounts see higher Dollar/Swiss, while in the short term there is still risk lower given the prospect of a fresh stimulus from the Joe Biden administration. Short-term players may prefer to short while medium and long term may want to wait.

 
 

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.

 

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Earnings Season Started to Drive Stocks Higher

Author: MFMTeam   |  Publish date: Wed, 13 Jan 2021, 8:54 AM


STATE OF THE MARKETS

Earnings Season Started to Drive Stocks Higher. US major indexes edged higher Tuesday, amid earnings seasons that will mark corporate earnings performance post lockdowns. Investors are paying attention especially to the financial sectors that will have the like of Chase, BlackRock, Wells Fargo and Citigroup reporting on Friday. In the mean time, more than $750b flowed into the US treasuries, as yields for 10Y closed for 1.13% and the shorter 5Y closed for 0.5%

Crude continued its upward trajectory as concerns for short-term demand were rebalanced with Saudi Arabia pledge to cut supply as well as China optimism and the expectations for the weekly EIA supplies to fall. The black gold closed above $53.20/bl for the first time in 11 months. Gold saw firm bid in the $1,850 levels as investors concerns for inflation bolstered demand for the yellow metal.

In the FX space, Dollar demand lost its lead in the short-term while retreated by two notches in the medium term as yields point support in the interim especially from negative yielding Swiss in the long term. Investors were most bullish in Sterling though recent narratives did not bode well for the Queen currency.

OUR PICK – XAU/USD

Rising Inflation Will Drive Gold Higher. History shows that the anti-inflationary asset precious metal, will always rise with rising inflation. Unprecedented monetary stimulus from the US Federal Reserve has driven assets prices higher especially the stock markets and real estate. Consumer goods have not feel the effects that much as most of the money were spent on investments. Gold, due to price fixing, has not reflect its true value; but we believe any dips is an opportunity to buy, especially when religious festivals would bolster demand for the yellow metal. We believe recent drop has bottomed out and prefer buy on dip with $1,810 stop as  price struggled to break convergence of daily ($1,848.00), weekly (1,875.25) and monthly (1,861.85) pivot. Above $1,880 should clear the path to initial target $1,900.00

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.

 

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Equities Retreated on Profit Taking

Author: MFMTeam   |  Publish date: Tue, 12 Jan 2021, 8:53 AM


STATE OF THE MARKETS

Equities Retreated on Profit Taking. Rising corona virus cases globally and another possibility of President Trump impeachment, forced investors to take more profits off the table. Broad equities weakness were observed on the back of rising bond yields with the US10Y closed above 1.15% for the first time in 10 months. Equities decline were led by communication services, consumer and real estate, while health care and energies made a rebound.

Crude retreated lower on concerns of renewed lockdowns would hamper short-term demand. The black gold closed below $52.25/bl while it’s counterpart, the yellow metal gold dropped as low as $1,817.14 before finding bidders to closed above $1,844.65/oz as investors cashing out for Dollar.

In the FX space, the greenback continued its lead in the short term while seize the lead for the medium term forcing Euro and Kiwi to the back burner. Changing sentiments in the long term was also observed as Dollar is being supported by Loonie, Swiss and Yen; which suggested that short covering in Dollar might persist for quite some time.

OUR PICK – GBP/USD

Unsettled Brexit and Negative Rates May Cap Sterling Growth. Today’s speech by the BoE’s external MPC member, Silvana Tenreyro, about the need for additional stimulus and keeping options open for pushing interest rates into negative territory; plus absence of an agreement on financial services with the EU, may be the catalysts that would cap Sterling further growth. 52 week high circa 1.3700, and lower high circa 1.3670, and further lower high circa 1.3630 have formed the upper downtrend line in the 8H chart with 1.3600 stands as weekly pivot. 21 days VPOC is around 1.3580 and we prefer sell on rally for the short and medium term accounts. Short term traders may want to set hard stop at 1.3630 and cut losses short if rates closed above 1.3600 on the daily.

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.

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