Weekly Updates 17/7/23 –21/7/23 July 17, 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 (10 July 2023 – 14 July 2023)

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

Last week, the stocks recorded a week of strong gains as investors welcomed data showing a continued cooldown in inflation but analysts expect the FOMC would hike rates one final time in July while starting to cut rates in 2024. S&P index ended the week 6.5% below all-time intraday high in early 2022. The Nasdaq Composite recorded an even stronger gain but remained 12.94% below its record peak. The US Treasury prices jumped due to the 10 year US Treasury note yield falling below 4%. Analysts forecast that 4% is the peak in yields for this tightening cycle as it has struggled to break through 5% since the failure of Silicon Valley Bank and Signature Bank.

Updates for the week (17 July 2023 – 21 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 production data from the US, China is releasing its GDP, Industrial production and retail sales data. US Analysts are expecting retail sales to continue rising as households still have the capacity to spend where there will be a continued spending in the summer months. Survey data has continued to demonstrate pessimism and weak activity for industrial production due to higher cost in capex spending (higher interest rates and stricter bank lending standards). For China, analysts expect its GDP YoY to rise by 7.1% which shows that recovery from Covid is great. However, data from Industrial production is giving contradicting results thus investors are still on the sideline.

This week, most of the corporate earnings releases are from the financial institutions as reporting season ramps up. From last week’s release, JP Morgan posted a record of $41.3b in revenue for Q2, stronger than expected which was driven by the high net interest income. The same goes for Black Rock with its Q2 revenues came in largely in line with expectations at $4.46b. This gives market participants a forward guidance of how the banking sector is doing, indicating that the market has priced in the rising interest rates. Besides, some investors are also looking at Tesla’s earnings release due to the steep discounts given on its models to spur demand, this helps to play a favor in Tesla’s upcoming results. Next in line, investors are also focused on Netflix as its earnings results are one of the important parameters for market sentiment after a strong bull run of tech stocks in Q1 2023. Netflix’s newly launched ad-supported tier and password-sharing crackdown policies are the focus of its upcoming earnings report.

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.

S&P 500: Riding the Bullish trend- by Annabelle

Trade Set-up:

• From the chart above, we note that S&P has been trending up consistently throughout the year. Many has noted that S&P has been trending to the point of hitting past its 14 month high.
• Several factors can be attributed to the bullish growth such as the flight to safety, but to tech stocks instead since Apple stock and other big tech names have continued to show unprecedented growth amidst economic uncertainty.
• Furthermore, since earnings have remained steady over past quarters, investors may be feeling more assured with this safety net they have drawn for themselves. Despite that being the case, it is still imperative for traders to keep in mind the possibility of recession looming just around the corners.
• Hence. we advise traders to remain cautious and to not blindly chase after the market.

Trade Execution:

• A channel has been identified and drawn in the chart above. Traders should long when prices hit support, and apply a trailing take profit technique as prices reaches resistance. This would allow traders to not only benefit from the current bull market and reap in gains from possible further rallies, but at the same time set in a sensible point of entry.

EUR/USD eases from multi-month high past 1.1200

Trade Set-up:

• EUR/USD retreats from the highest level since February 2022 amid mixed concerns. Euro bulls were rampant last week with downbeat US inflation numbers flagging concerns about Fed’s nearness to policy pivot, alongside ECB members staying hawkish despite mixed Eurozone data.
• On the technical front however, EUR/USD seems stalling on the bid but underlying momentum is undeniable. RSI also signals the pair is currently overbought. The pair has entered a new channel with immediate resistance coming from the previous channel line.

Trade Execution:

• Technically, the pair is considered on an uptrend. There could be some downward pressure as the pair attempts a retracement back to the 1.1100 handle for a more sustained up-move. This could indicate sell pressure in the short-term, while buy pressure remains in the long-run.
• Investors looking to trade should trade with these technical levels in mind. Immediate top-side resistance at 1.1280 while down-side support is sought at 1.1100.

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.