Weekly Updates 31/7/23 –4/8/23 July 31, 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 July 2023 – 28 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 revolves around the Fed hiking interest rates by another quarter of a percentage point. The Fed also highlight that the economy still needed to slow and the labour market to weaken for inflation in order for it to fall back to the US’s central bank’s 2% target. On the other hand, the HSI reversed losses to rise marginally in early Fruday trade after the PMI data was released where the Chinese yuan hit its weakest against the US dollar since mid-November.
Updates for the week (31 July 2023 – 4 August 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 mainly US’s employment data and China’s production data. Markets participants are paying full attention on the employment numbers releasing this week as higher than expected NFP has been a driver of this year’s stock rally where it signals that the economy is growing too rapid at a pace that could spark worries that the Fed will need to raise rates more than expected. Analyst are expecting China’s Manufacturing to continue to fall as the economic momentum is still weak in China as global economy is also slowing down which likely to put further pressure on demand for China’s products. This also supported by the fall in it’s Caixin PMI where analyst are expected it to fall by 0.4.
The earnings season continues this week with reports due from some of the market’s most widely held names including Amazon, Apple, DBS, OCBC, etc. Recently, Amazon wrapped a successful Prime Day sales event with 375million items sold which it is a sign that the 2nd quarter retail results will be down. Market participants are expecting Apple to have a decline in its revenue as there are huge questions about whether the company will grow more as the Vision Pro mixed-reality goggles won’t ship till 2024 while the AI push on Apple products are still on-going and the iPhone 15 launching is still months away. In SG, all eyes are on DBS and OCBC where the board expectations of the end towards the Fed hiking interest rate while the SORA used by banks to price the loans are seen to slowed down recently which has an impact on the bank’s net interest margins. This also indicates that banks will need to depend more on other steams like fee income or loan growth.
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.
US SP500 Index (INX.IX): Trading Opportunity – By Donny Lew
Key Entry Price Pivot(s):
- 4460
Recommended Trade:
- Long when it pull back to support level 4460, take profit at 4610, stop loss at 4390
Remarks:
- US S&P 500 Index (INX) has seen a strong uptrend.
- We are waiting for it to pull back and found support at the 4460.
- We potentially look to take a long trade on S&P 500 when forming a bullish bar at the support level to continue the uptrend moving ahead.
EUR/JPY rose following BoJ decision and German data
Recommended Trade:
- Long above 156.00 handle, take profit at 157.50 (previous high), stop loss at 155.00.
Alternative Case:
- Short below 155.00 levels, take profit at 153.00 (consider let profits run), stop loss at 156.00
Remarks:
- The 2-day BOJ meeting concluded with an unexpected adjustment to the Yield Curve Control (YCC), leading to market volatility. However, the BoJ interest rate decision remained unchanged and it was commented that the YCC tweak was not a step to normalization. That is, the bank is no-where near raising rates, hence weakening the Yen. On the other hand, Germany’s inflation data came in-line with expectations of 6.5% but lower than the previous 6.6%, and Q2 GDP data disappointed.
- On a technical front, the pair had a bullish end to the dovish week. The Relative Strength Index (RSI) is just slightly above the midline, with a steep positive slope. These are all indications that the pair is still considered on an uptrend.
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.
