Weekly Updates 23/10/23 – 27/10/23 October 23, 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 (16 Oct 2023 – 20 Oct 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 the US Fed being inclined to hold interest rate steady again at its next meeting while leaving open the possibility of a future hike if policymakers see further signs of uncontrolled inflation. The US 10 year bond has surge to almost 5% causing investors to re-evaluate their investment in risky assets on a risk-rewards basis as risk-free rate is around 5%. This extended rise in yields has put pressure in many asset classes in recent months, where the promise of guaranteed yields on US government debt draws investors away from equities. This sends most of the indexes down last week.
Updates for the week (23 Oct 2023 – 27 Oct 2023)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
This week’s macro news mainly focuses on GDP data, New Home Sales and both Personal Income and Personal Spending Data from the US. With analysts and market participants forecasting a potential recession in Q4 of 2023 to early 2024, macro data like GDP will give market participants a glimpse in to overall strength of the economy while Personal Spending and Personal income will show the overall strength of the US consumer which contributes ~68% of GDP. A drop in consumer spending is a leading indicator for a potential recession. Analysts expect an increase in GDP Annualised QoQ from 2.1% to 4.3%, a rebound in overall US GDP.
Traders should position their portfolio before the macro news release to not be negatively affected and have good risk management.
This week’s corporate earnings are ranging from the FAANG (Meta, Amazon, Google), tech (Verizon, IMB, Comcast, Intel) to the energy sector (Exxon, Chevron), etc. From these releases, investors are able to use it as a forward guidance on their investment decisions in a rising interest rate environment since the FAANG will be the ones setting the tone for the other tech companies in Q4. Moreover, the earnings release from big companies like Exxon and Chevron will help investors to get a better idea with the the short-term oil prices as there is an uncertainty around the trajectory for interest rates along with the Israel-Gaza war which made the overall energy sector volatile.
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.
Alibaba (9988.HK): Bearish Trading Opportunity- By Donny Lew
Key Entry Price Pivot(s):
- HK$85
Recommended Trade:
- Short at level HK$85
- Take profit at HK$75
- Stop loss at HK$90
Alternative Case:
- Long above HK$90
- Take profit at HK$100
- Stop loss at HK$85
Remarks:
- Looking at the daily chart of Alibaba, we can see that price has been in a downwards trend channel.
- Currently, price is rejecting the resistance of the channel and we can potentially look for a short trade in a lower timeframe with confluence such as a resistance or a bearish bar with significant volume.
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.
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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.
