Weekly Updates 10/7/23 – 14/7/23 July 10, 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 (03 July 2023 – 07 July 2023)

*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.

Last week’s market action revolved around US Federal Reserve minutes revealing that a large majority of Fed officials expect rates to remain high longer. Sending most indexes to close lower. WIth Nikkei 225 and Hang Seng Index closing -3+% lower. Hang Seng tech rose ~2% due to market participants expecting the China regulatory body to conclude the regulatory crackdown on China Finance technology companies like Ant Financial. Stronger than expected data coming out of the US, pointing at a possible longer than expected high rates environment from the Fed.

Updates for the week (10 July 2023 – 14 July 2023)

The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.

This week’s macro news mainly focuses on the sentiment data from the US, production data from SG while China is releasing its inflation and trade data. The US economy is pricing in the higher interest rates environment along with the hawkish comments by the FED, thus some investors are expecting a lower CPI reading. Although there are conflicting expectations with PPI Final demand increasing and the Sentiment improving, many investors are still on the sideline. Analysts are expecting China PPI deflation steepens since demand for China’s products worsen. This is supported by the expectations of falling China Exports where it signals to the market participants that the recovery of China weakens.

This week’s corporate earnings releases are mainly from the US. Some of the big banks like JP, Black Rock and Citi Group are the first to release their earnings which gives a heads up to investors of how the bank sector is doing in an increasing interest rate environment. On the other hand, market participants who has exposure in healthcare sector are paying attention to United Health earning release as the results give a forward guidance about the insurers in the industry, whether are they paying more claims than collecting premiums. This also give them a glimpse of the hospitals whereby are they profiting more from the insurers since medical costs are on the rise.

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.

SIA (C6L) Trading Opportunity – by Alex

Trade Set-up:

• Looking at the daily chart of SIA, we can see that price has hit the resistance line (red line) of $7.73 and failed to close above it, rejecting the resistance line.
• Currently, price has formed a downward trend channel.

Trade Execution:

• We can look for shorts upon rejection of the resistance of the downward channel based on a shorter timeframe in confluence with the daily timeframe bias. We may see price extending towards the support of the trend channel.
• However, a break above the resistance of the downwards channel may signal an overall shift to the upside and we may look for longs upon retracement.

AUD/USD kicks off the week on the front foot as China’s inflation eyed

Trade Set-up:

• AUD/USD opens the week on a positive momentum where last week’s attempt to break below the 0.66 handle was quelled with a swift rebound on Thursday and Friday, with a disappointing US NFP amid productive US-Sino talks. All eyes remain on the US CPI data, RBA Governor Lowe’s speech, and China inflation numbers.
• From a technical perspective, the pair traded into a mini consolidation phase between the 0.6600 to 0.6720 levels. It may appear the pair is attempting a double bottom having tested the 0.6600 levels twice but needs better price breakthroughs to confirm this. RSI indicator is sitting on the fence as well.

Trade Execution:

• Technically, the pair is considered on range trading. Investors looking to trade should trade on the range, else, to stay put until a breakthrough in price movements is sought.
• Traders could use these levels as technical guides to either limit their losses or take on new positions with breakout plays to either side.

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.