Weekly Updates 1/5/23 – 5/5/23 May 2, 2023
This weekly update is designed to help you stay informed and relate economic and company earnings to potentially value-add your CFD (Contract For Difference) trading via hedging (risk reducing). This article should be used for educational purposes only and not as financial advice. We urge all traders to carry out your own due diligence before submitting trades.
Recap for last week (24 Apr 2023 – 28 Apr 2023)
*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.
Recap for last week’s market actions, FAANG’s corporate earnings beat expectations and rallied to bring the US indexes higher. Tensions are building between China and the US causing both the Hang Seng index and Hang Seng Tech index to fall. With risk of sanctions, new political risks are in play. Market participants should evaluate such risks before considering trading HK stocks and HK indexes.
Updates for the week (1 May 2023 – 5 May 2023)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
This week’s economic calendar focuses on the Fed’s rate decision, with market participants expecting a 25 basis point rate hike. With employment data (ADR employment change, non-farm payroll and unemployment rate) coming up, market participants and the Fed are looking at those numbers closely. As the employment rate is part of the Fed’s mandate and any weakness in the employment data may sway the Fed to lower rates sooner than expected. Hedging and trading opportunities are available during the week as macro-economic information is slowly being released.
Upcoming corporate earnings will be focused on chip manufacturing (NXP, AMD,Qualcomm) followed by financials (HSBC, BNP, Square, DBS, …) consumer staples (Kraft Heinz, Yum! Brands, …) and tech stocks (Fortinet, Expedia, Coinbase, Booking, …). With Apple launching their new card, they are expanding into the banking and credit card business. Exciting news for Apple, market participants are slowly absorbing the potential impact Apple has on the financial industry.
If you hold equity positions in these stocks, you can hedge your positions using CFDs to mitigate the risk of disappointing earnings releases.
For those looking to speculate or capitalize on the increased volatility, CFDs provide leverage and ease of going long and short across a broad range of products available.
CapitaLand Investment Limited (SGX: 9CI) – Opportunity Following Dividend and Rights Issue (Sean, CFD Dealer
Trade Set-up:
- 9CI’s share price has recently fallen after issuing its dividend of $0.12 along with 0.057 shares of CapitaLand Ascott Trust (HMN) per share.
- From the chart, the orange, blue and black exponential moving averages (EMAs) represent the 20, 50 and 100 time periods respectively.
- As of 28/04/23 market close, the daily chart shows that price has rebounded slightly off the long term 100-day black EMA.
- RSI has also dipped following this gap down in price signaling downward momentum.
Trade Execution:
- When the next daily candle breaks above the high of the 28/04/23 candle, we can look to take a long trade and take profit at around the $3.88 level.
- However, if price breaks below the 100-day black EMA again, we can look to enter a short trade and take profit at around the $3.60 level, where the previous gap up occurred.
USD/JPY soars after BOJ decision (Kenneth, Head FX CFD)
Trade Set-up:
- The USDJPY soared in trading on Friday as BOJ scrapped its guidance on future interest rate levels while keeping its main stimulus measures unchanged, as new BOJ Governor Kazuo Ueda prepared the ground for taking a more flexible stance. That has the USDJPY moving towards the resistance zone from the previous breakout where BOJ altered the YCC in December last year.
- Fundamentally, there seems to be further room for USD/JPY to rise as the Fed still looks set to push up borrowing costs further when it meets this week, while that possibility still seems a long way off for BOJ’s rock-bottom interest rate, given a reiterated commitment in Friday’s statement to continue easing with yield curve control.
- In technical analysis, the currency pair appears to have made a double bottom in early April, with a clear sign of reversal when the SMA20 crossed above the SMA50 last week.
Trade Execution:
- With price action soaring above the 135.00 handle, this represents an opportunity for buyers to get in on the up-trend. Investors should approach with a “buy-on-dip” strategy, placing their stop losses on either the SMA20 or SMA50 levels.
- For exit strategies, investors could look for overbought signals from the RSI crossing above the 70 levels or the price action entering the resistance zone.
If you have any feedback or questions, feel free to email us at samht@phillip.com.sg or onishathyeyn@phillip.com.sg or cfd@phillip.com.sg.
Disclaimer
This material is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to buy or sell the investment product mentioned. It does not have any regard to your specific investment objectives, financial situation or any of your particular needs.
Accordingly, no warranty whatsoever is given and not liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of your acting based on this information. Investments are subject to investment risks.
The risk of loss in leveraged trading can be substantial. You may sustain losses in excess of your initial funds and may be called upon to deposit additional margin funds at short notice. If the required funds are not provided within the prescribed time, your positions may be liquidated.
The resulting deficits in your account are subject to penalty charges. The value of investments denominated in foreign currencies may diminish or increase due to changes in the rates of exchange.
You should also be aware of the commissions and finance costs involved in trading leveraged products. This product may not be suitable for clients whose investment objective is preservation of capital and/or whose risk tolerance is low.
Clients are advised to understand the nature and risks involved in margin trading. You may wish to obtain advice from a qualified financial adviser, pursuant to a separate engagement, before making a commitment to purchase any of the investment products mentioned herein. In the event that you choose not to obtain advice from a qualifies financial adviser, you should assess and consider whether the investment product is suitable for you before proceeding to invest and we do not offer any advice in this regard unless mandated to do so by way of a separate engagement.
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About the author
Sam Hei Tung (Dealing) and Onisha Thye (Dealing)
Sam graduated from National University of Singapore with a Master of Science in Finance. He personally manages his own investment portfolio and does equity and economic research in his free time. Sam believes that education and information is essential to making good financial decisions.
Onisha is a dealer at the CFD Dealing Desk. She graduated from Monash University with a double major in finance and econometrics. Her natural curiosity for finance is what drove her to be in this field as she is fascinated by all the possibilities and opportunities that are available to grow one’s wealth, either through trading or investment.
