Weekly Updates 5/8/24 – 9/8/24 August 5, 2024
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 (29 July – 02 Aug 2024)
*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 Fed left its benchmark federal funds rate at 23-year high for the 8th meeting in a row, holding it in a range of 5.25% to 5.5%. But the central bank seems increasingly confident that the inflation is headed towards its 2% target where it could start lowering interest rates as soon as its next meeting in Sept. US stocks plummeted for 2nd straight session on last Friday while Nasdaq confirmed it was in correction territory after a soft jobs report stoked fears of an oncoming recession. This fear has spread globally with Japan Nikkei 225 plunging 8.89% last week. Another important thing to note is that the BOJ raised its benchmark interest rate to around 0.25% the highest level since Dec 2008 from a previous range of 0% – 0.1%. This has caused investors to reassess their carry trades where the rate hike diminishes the attractiveness of short yen positions as the expectations of the narrowing rate differential between USD and JPY.
Updates for the week (05 Aug – 09 Aug 2024)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
This week ahead is relatively light on economic data. The release of ISM Services Index which is a based on surveys sent to purchasing and supply companies of more than 400 service firms will kick off the trading week. Economist are looking at a 51.5 in July according to Bloomberg, which indicates a slight expansion of the service economy in US after a contraction in June. On the other hand, China’s economy has relied on its industrial production to keep growing its year while this week’s China economic release will provide investors clues on how strong that support remains. China exports YoY releasing on Wednesday may show some strengthening in July which indicates demand for China goods are still improving.
Previously, around 75% of the S&P 500 has reported their earnings. 79% of those exceeded earnings while 59% of them reported better than expected revenue results according to FactSet. Upcoming earnings release mainly focuses on consumer discretionary and entertainment industries. Walt Disney shares have been trending lower on the price charts since the media and entertainment giant won its proxy flight against Nelson Peltz. The company will unveil its quarter results ahead of Wednesday’s open where industry analysts expect Disney to report earnings of $1.19 per share on a revenue of $23billion. Wall Street expects better results from Robinhood when its online trading platform discloses its Q2 results after Wednesday’s close, where the company has built a base of younger investors that will accumulate significant wealth over the next 10 years. Investors are also laying eyes on companies from HK and SG to gain an understanding of its respective performance to make informed decision for their portfolio.
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. As CFD is traded on margin, there is a risk of losing more than your initial deposit amount and traders need to adopt proper risk assessment and management to determine if CFD is the product for you.
EUR/USD: Bullish Run by Tan Peng Chien
Key Entry Price Pivot(s)
- 1.1033
Recommended Trade
- Long at 1.0911
- Stop Loss: 1.08835
- Take Profit: 1.10353
Alternative Case
- Short at 1.09680
- Stop Loss: 1.1044
- Take Profit: 1.07609
Remarks
- U.S. Dollar Index took a dive after tapping into bearish order block
- Area of imbalance above current prices can be interpreted as liquidity to be grabbed
- Target the high of the fair value gap which also serves as the pivotal point with stop loss set just before consolidation price at 1.08835
- Alternative trade would be a short at the start of price imbalance above with a stop loss at the previous high of 1.1044 and target profit of 1.07609 for a healthy risk-to-reward
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.
The resulting deficits in your account are subject to penalty charges. The value of investments denominated in foreign currencies may diminish or increase due to changes in the rates of exchange.
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.
You are advised to read the trading account Terms & Conditions and Risk Disclosure Statement (available online at www.poems.com.sg) before trading in this product. Any CFD offered is not approved or endorsed by the issuer or originator of the underlying securities and the issuer or originator is not privy to the CFD contract. This advertisement has not been reviewed by the Monetary Authority of Singapore.
CFD Disclaimer
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. The resulting deficits in your account are subject to penalty charges. The value of investments denominated in foreign currencies may diminish or increase due to changes in the rates of exchange. 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 qualified 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. You are advised to read the trading account Terms & Conditions and Risk Disclosure Statement (available online at https://www.poems.com.sg/) before trading in this product.
Any CFD offered is not approved or endorsed by the issuer or originator of the underlying securities and the issuer or originator is not privy to the CFD contract.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
This material is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products.
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.
