Weekly Updates 9/10/23 – 13/10/23 October 9, 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 (02 Oct 2023 – 06 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 Global Brent benchmark falling below USD$85 per barrel while the WTI is sitting below US$84 per barrel, this signals a retracement in the oil market, which is recorded as the biggest decline in more than a year. Stocks rebounded earlier losses due to stronger-than-expected September jobs report, while wages are moderating which is a sign that the labour market could be in a for a soft landing. The surge in long-term US Government borrowing costs will continue to cause financial distress as investors are worried about the 10 year yields above 5%.
Updates for the week (09 Oct 2023 – 13 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 FOMC Meeting Minutes from the US and China, CPI Data coming out of both the US and China and GDP & MAS monetary policy statement data from Singapore. FOMC minutes and CPI data from the US will be the main focus as analysts are looking for any tone change from the Fed be it more hawkish or dovish. Given the recent spike in US bond yields, market participants are expecting the Fed to be more cautious and sticking to their plan to increase rates one last time in November. CPI data is expected to drop from 0.6% prior to 0.3% MoM, showing a decrease in US inflation. A measure that the US Fed looks closely at.
This week’s corporate earnings focuses on the financial companies in the US, from JP Morgan (Investment Bank), Black Rock (Investment management) to Wells Fargo (Regional Bank) and CitiGroup (Global Bank). Setting the stage for the upcoming earning season with its earning and forward guidance. Delta Airlines’s earning release and forward guidance will paint the domestic and international tourism landscape for the US. Traders and investors of airline companies should pay attention to this earnings release.
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.
Nikkei 225: Are the Bulls Still Going Strong? – By Annabelle Tang
Trade Set-up:
- From the chart above, we see that Nikkei 225 has been trending downwards since 15 September 2023 in which it has hit the low price point of 30250 on 4th October 2023.
- Since then, prices have slowly been trending upwards. It might be interesting to note that the low price range of 30250 on 4th October 2023 was last seen in May 2023.
- By understanding the logic behind trading heuristics and how it affects the microstructure of trading i.e. technical analysis (support/resistance, how price patterns tend to repeat itself), we deem it likely for prices to resume its previous behaviour and start trending upwards once again, as it did in May.
Trade Execution:
- Traders can long above the green line, and set a stop loss that is 1/3 of the potential take profit accordingly.
- If traders are able to hold onto longer term positions, then we recommend the stop loss to be placed at 30230, and partial take profit at 33,250, then final take profit at 33,500.
- Alternatively, if prices begin falling below 30200, traders may wish to wait out a little longer and observe before shorting due to the possibility of Nikkei 225 wiping out all of its earlier gains (which started in June) as it retraces back to the price it was trading at for the past 3 decades.
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.
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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.
