COTERRA ENERGY INC. - Stocks Rebound Ahead of FOMC - 03/16/2022 (GMT)

STATE OF THE MARKETS
Stocks rebound ahead of FOMC. US stocks staged a rally on Tuesday as markets expected the Feds to raise 25bps given the Russia-Ukraine conflict. Dow (+1.82%), Nasdaq (+2.92%) and S&P (+2.14%) including Russell (+1.40%) closed in the green as metals and energy were beaten to a retreat. The Dollar index was under pressure but remained well bid around the 98.80 barrier as the 10Y yields continued to hold the 215bp mark.

In the commodities market, major commodities continue to slide as markets weigh the Russia-Ukraine conflict on the global economies. Crude settled below $93.80/bl while gold was flirting with the $1,920/oz barrier. Elsewhere, iron ore settled lower around $144.80/tn as New York closed. In the FX space, sentiments seemed more bullish in the short and medium term as the safe-haven Swiss and Yen were running behind in the offer territories while Euro, Loonie and Sterling commanded the bids. Long term sentiment was unchanged.

On Wednesday, markets look for earnings reports from Lennar Corp (LEN), ZTO Express (ZTO), William-Sonoma (WSM), Jabil Inc (JBL), Semtech (SMTC), Guess (GES) and Brilliant Earth (BRLT) as well as the latest figures on the US housing market index, retail sales and the much awaited Fed’s FOMC statement. The EIA petroleum status report will be in the spotlight for energy traders.

OUR PICK – COTTERA ENERGY (CTRA, NYSE)

Targets reached and energy still set to rise. Unprecedented money supply has always led to higher prices and a lot of this inflation was factored into the equities markets, hence the higher valuation. The past three quarters have seen exodus from equities and the Russia-Ukraine conflict has exacerbated the outflows. Investors are rotating to value, commodities and some cash as real yields went negative. Oil stocks are retracing for pullbacks and we see further upside in CTRA after previous targets were reached recently.


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