Weekly Updates 21/8/23 – 25/8/23 August 25, 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 (14 Aug 2023 – 18 Aug 2023)
*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.
Last week’s market movement revolved around Fed’s meeting minutes which Fed Officials signaled upside risk to inflation and potentially leading to more rate hikes. This sent markets into a free fall as market participants are pricing in higher interest rates for a longer duration. And that inflation may be more sticky than anticipated. Furthermore, data coming out of China was bearish, causing it to push the Hang Seng index towards bear market territory.
Updates for the week (21 Aug 2023 – 25 Aug 2023)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
This week’s macro news mainly focuses on Federal reserve chair Jerome Powell set to deliver a speech at Jackson Hole on economic outlook and future path of interest rate, Housing data and Manufacturing data coming out of the US and . Which is expected to be resilience even with the high interest rate environment. Followed by SG CPI data which is expected to decrease YoY. Markets are taking a break from major macro news compared to last week. Analysts and market participants are slowly pricing in macro data and changing their expectation of the base case looking forward.
This week’s corporate earnings focuses on China companies like Baidu, XiaoMi, China Construction Bank, Ping An Bank and more. With other China companies releasing earnings the previous few weeks, market participants have higher expectations looking forwards. Tech and chip manufacturing companies like NVIDIA, Grab and Zoom are set to release earnings this week, and all eyes are on them. Given NVIDIA’s impressive rally, analysts and traders are eager to see if the fundamentals can catch up to the price movements.
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.
Potential Trading Opportunity: Alibaba (9988.HK) – By Alex Lee
Key Entry Price Pivot(s):
- HK$87.50
Recommended Trade:
- Long above HK$87.5, take profit at HK$97.95, stop loss at HK$85
Alternative Case:
- Short below HK$85, take profit at HK$76, stop loss at HK$90.5
Remarks:
- Looking at the daily chart of Alibaba, we can see that price has been in a upwards trend channel.
- Currently, price is rejecting the support of the channel and we can potentially look for a long trade in a lower timeframe with confluence such as a support or a bullish bar with significant volume.
AUD/USD flirts with daily low around 0.6400 mark, vulnerable to slide further
Recommended Trade:
- Wait for retracement and Short between 0.6500 to 0.6600 handle. Take profit below 0.6300, stop loss above at 0.6700.
Alternative Case:
- Long at 0.6410, take profit 0.6500, tight stop loss at 0.6360.
Remarks:
- AUD/USD struggles to capitalize on its modest intraday gains last Friday to above 0.6430 area with disappointing domestic jobs data on Thursday indicating a more-likely on-hold rate decision by the RBA in September. The Fed’s hawkish outlook underpins the USD and contributes to keeping a lid on the major.
- The pair is also under pressure due to China’s economic woes despite talks of additional Chinese stimulus measures. The fears were fueled by the fact that China Evergrande Group, one of the country’s biggest real estate developers, filed for protection from creditors in a US bankruptcy court, adding to worries about a deepening crisis in China’s property sector.
- Technically, the RSI on the daily chart is already flashing oversold conditions, holding back traders from positioning for any further losses in the absence of any relevant economic data from the US. Nevertheless, the fundamental backdrop seems tilted firmly in favour of bearish traders and suggests that the path of least resistance for the AUD/USD pair is to the downside.
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.
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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.
