⏳Equity markets finding footing🗝

Equity markets ended the day broadly in the green after reversing some early losses. It was a calm trading session. Oil rose after some disappointing news regarding the ceasefire negotiation between Russia and Ukraine. 

With the 10 year and 2 year Treasury yield narrowing, the Fed may be less inclined to be too aggressive in rate hike. While most indices have recovered tremendously, there is some doses of geopolitical risk. 

Pika World will be cautious of aggressively adding new positions. 

🏋️Fed is still hawkish🗽

As the Fed’s latest move provided relief to the market in our previous update, the tone remains aggressive. It points to the ending of the significant emergency stimulus that is led to the first rise in interest rate since 2018. 

One thing to take away is that the Fed continues to be highly data-dependent and will be looking at removing accommodation in the balance sheet. This means a more progressive stance towards taming inflation by removing liquidity in the market. Still, the Fed is cautious of balancing economic growth and maintaining price stability. 

In a nutshell, Uncle Powell is confident that the US economy will withstand the less accommodative monetary environment as demand remains firm in the economy. 

🚘EV Stocks🚙

One of Pika World’s favourite sectors, we can see that many of the counters have been battered hard. Tesla accounts for a large proportion of the decline in the sector, as some analysts are still in love with EV names other than Tesla. 

For example, Rivian is observed to have about a buy rating by 70% of the analysts at a price target of $82, which is a massive gap from the current level. However, the company faces multiple headwinds such as cost inflation and persistent delay in production schedule that is wearing off investors’ confidence. 

On the flip side, Tesla has become a more mature “bull” by Wall Street rating, which less than 50% of the analysts covering it with a buy rating. The average price target has also moderated to $946. 

Nonetheless, Pika World will be sticking to the counter as it has become a more mature and profitable company and probably a safer bet in a sea of alternative options.