Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
The U.S. dollar regained strength against major counterparts on Tuesday.
Supported by higher U.S. Treasury yields, market expectations for a March interest rate cut fell below 59%, down from 77% just one day prior.
Fed Governor’s Comments:
Fed Governor Christopher Waller’s statement suggested a cautious approach, indicating that the Federal Open Market Committee (FOMC) doesn’t need to ease its stance as rapidly as in the past.
This stance contributed to the strengthening of the U.S. dollar.
Currency Performance:
Euro, British pound, and Australian dollar experienced sharp declines against the U.S. dollar.
Notable thresholds were breached during this pullback.
Fed March Meeting Probabilities:
The probability chart from CME Group highlights the diminishing likelihood of a rate cut in March.
EUR/USD Technical Analysis:
EUR/USD exhibited a decline, breaking the lower boundary of a short-term rising channel at 1.0930.
The pair moved towards the 200-day simple moving average, a crucial support at just above 1.0840.
Maintenance of this support is imperative; failure may lead to a retracement towards 1.0770.
If downward pressure eases and prices rebound, technical resistance is anticipated at 1.0930, followed by 1.1020.
Further strength could shift focus to 1.1075/1.1095 and subsequently 1.1140.
STOCK MARKET ANALYSIS:
Market Overview:
US stocks encountered challenges on Tuesday as investors remained attentive to the trajectory of interest rates.
The lackluster start to the earnings season, particularly with big bank results, influenced market sentiment.
Performance Indicators:
Dow Jones Industrial Average (^DJI) concluded the session down 230 points, influenced notably by Boeing’s (BA) negative performance (-7.89%).
S&P 500 (^GSPC) experienced a 0.4% decline.
Nasdaq (^IXIC) closed slightly lower despite intermittent shifts into positive territory, driven by movements in chipmakers Nvidia (NVDA) and Advanced Micro Devices (AMD).
Key Stock Movements:
Goldman Sachs (GS) stock edged slightly higher following a reported fourth-quarter earnings increase of 51% year over year.
Morgan Stanley (MS) shares dipped up to 4% during the session but posted fourth-quarter revenue that exceeded Wall Street expectations.
Upcoming Retail Sales Report:
Investors await Wednesday’s retail sales report, anticipating its impact on the Federal Reserve’s data-driven policy decisions.
Last week’s unexpected cooling in US wholesale inflation increased hopes for a potential interest rate cut in March.
Fed Governor’s Perspective:
Fed Governor Chris Waller expressed belief in the Fed’s ability to lower interest rates in the coming year, contingent on inflation remaining in check.
He emphasized that the timing and extent of rate cuts will hinge on incoming economic data.
Corporate Developments:
A federal judge intervened in the merger deal between Spirit Airlines (SAVE) and JetBlue (JBLU) due to antitrust concerns.
Spirit Airlines faced a significant 47% drop in its stock value following the news of the blocked merger.
Overall Sentiment:
The market remains cautious and attentive to various factors, including corporate earnings, interest rate expectations, and economic data, influencing trading decisions and overall sentiment.
In the shadows of the 17th-century Amsterdam, a groundbreaking financial experiment unfolded, forever altering the course of economic history. The year 1602 saw the birth of the Amsterdam Stock Exchange, a brainchild of the Dutch East India Company, marking the world’s inaugural official stock exchange.
The Amsterdam Stock Exchange source: The Low Countries
Under the canopy of a buttonwood tree on Wall Street, 24 stockbrokers laid the groundwork for organised securities trading, introducing the novel concept of issuing shares to the public.
Fast forward to today, where the once humble origins have burgeoned into a global financial behemoth. With a staggering size surpassing $100 trillion, the modern stock market stands as a testament to the enduring legacy of those early investors and the evolution of financial markets through centuries.
Whether you’re a novice or a seasoned investor, understanding the basics is key to navigating the complexities of the stock market. In this comprehensive guide, we’ll delve into the essentials of stocks and Share CFDs, with a special focus on popular trading strategies.
source: ABC News
Stocks: Unlocking Ownership and Dividend Potential
At its core, a stock symbolises ownership in a company, with popular names like Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), and Google’s Alphabet (GOOGL) exemplifying this ownership’s profound impact. Investors holding these stocks actively participate in globally influential companies.
Beyond theoretical ownership, shareholders hold significant rights. This includes voting on corporate decisions and attending pivotal annual shareholder meetings, allowing active engagement in corporate governance.
Stock ownership’s allure extends to the potential for dividends, a feature prominent in dividend-paying stocks like Johnson & Johnson (JNJ), Coca-Cola (KO), Procter & Gamble (PG), and McDonald’s (MCD). These stocks appeal to investors seeking a steady income stream, enhancing the overall return on investment.
In essence, owning stocks aligns investors with a company’s success and prosperity. It’s not just financial; it’s a connection to brands and businesses shaping our daily lives. Investors in these well-known companies become integral contributors to ongoing success and innovation in the business world.
Stock Exchanges: The Pulsating Heart of Global Trading
Major stock exchanges worldwide serve as the epicentres where the world’s most influential stocks are bought and sold, shaping the landscape of global finance. Two giants stand out in this domain – the New York Stock Exchange (NYSE) and NASDAQ.
The Largest Stock Exchanges in the World 2023 source: Visual Capitalist
The New York Stock Exchange (NYSE), located on Wall Street in New York City, is the largest and most prestigious stock exchange globally. It boasts a rich history dating back to 1792, providing a platform for some of the most prominent and established companies.
NASDAQ, on the other hand, is renowned for its technology-focused listings and electronic trading platform. Born in 1971, it has become synonymous with innovation and hosts many of the world’s leading technology companies.
In Europe, the London Stock Exchange (LSE) stands as a financial powerhouse, hosting a diverse array of companies. Meanwhile, the Euronext group, spanning Amsterdam, Brussels, Dublin, Lisbon, Milan, and Paris, plays a pivotal role in European trading.
Turning our attention to Asia, the Tokyo Stock Exchange (TSE) in Japan and the Hong Kong Stock Exchange (HKEX) command significant influence. These exchanges contribute to the vibrancy and dynamism of the Asian financial markets.
These exchanges are more than mere facilitators; they are the driving forces shaping stock prices globally. The dynamic interplay of supply and demand on these platforms directly influences the valuation of stocks.
Understanding the mechanics of stock exchanges, particularly the NYSE and NASDAQ, is essential for investors seeking to decipher the intricate forces that shape market trends and individual stock prices. As investors, being attuned to the activities on these exchanges equips us to navigate the complexities of the global financial arena.
Stocks and other financial instruments: Navigating the financial landscape
In the expansive realm of financial instruments, it’s vital to differentiate between various assets. Beyond stocks, investors encounter bonds and Exchange-Traded Funds (ETFs), each with its unique characteristics.
Bonds, in contrast to stocks, represent debt rather than ownership. When an investor buys a bond, they are essentially lending money to a company or government entity. In return, the bondholder receives periodic interest payments and the eventual return of the principal amount.
Exchange-Traded Funds (ETFs), on the other hand, are investment funds that trade on stock exchanges. ETFs offer a diversified investment approach by bundling together a collection of stocks, bonds, or other assets. They provide investors with a way to gain exposure to a broad market or sector without directly owning individual securities.
Understanding these financial instruments allows investors to tailor their portfolios to match their risk tolerance, investment goals, and preferences.
Stocks vs Share CFDs: Navigating investment avenues
Share CFDs, or Contracts for Difference, are financial derivatives that allow traders to speculate on the price movements of underlying stocks without actually owning the shares.
Unlike traditional stock trading, where investors physically buy and own shares in a company, CFDs are contracts between traders and brokers.
The derivative nature of CFDs lies in their ability to derive their value from the underlying asset, in this case, stocks. This derivative structure opens up a world of advantages for traders, enabling them to profit from both rising and falling markets.
Advantage 1: Leverage
One of the key advantages of share CFDs is the ability to trade with leverage. Leverage allows traders to control a larger position size with a smaller amount of capital. While this magnifies potential profits, it’s crucial to note that it also amplifies potential losses. This feature makes CFDs an attractive choice for traders seeking to maximise their market exposure without the need for a substantial upfront investment.
Advantage 2: Short Selling
Share CFDs provide a unique opportunity for traders to profit from falling prices through short selling. In traditional stock trading, short selling is often complex and may involve borrowing shares, but with CFDs, this process is streamlined. Traders can take advantage of market downturns by selling CFDs on stocks they anticipate will decline in value, potentially yielding profits even in bearish market conditions.
Advantage 3: Diversification
Diversification is a cornerstone of sound investment strategy, and share CFDs offer a compelling way to achieve it. With CFDs, traders can access multiple assets with a smaller capital requirement compared to traditional stock trading. This not only enhances risk management but also provides the flexibility to explore diverse markets and sectors.
If you’re an active, short-term trader seeking flexibility and leverage, share CFDs are ideal. Designed for day and swing traders comfortable with increased risk, CFDs allow you to profit in both rising and falling markets. With 24/5 trading, global market exposure, and lower transaction costs, they suit those wanting diverse opportunities.
Share CFDs Trading Tips: A Strategic Approach
Engaging in share CFDs trading demands a strategic mindset. To streamline your approach, focus on these five essential tips:
1. Thorough Research: Prioritise in-depth research on underlying assets, staying informed about market trends, company performance, and global economic factors.
2. Effective Risk Management: Set clear stop-loss and take-profit levels to manage risks diligently. Discipline in risk management is crucial in the unpredictable world of CFD trading.
3. Understand Leverage: Use leverage judiciously, considering its impact on both profits and potential losses. Avoid excessive leverage to mitigate significant financial risks.
4. Stay Informed: Regularly check economic calendars and major market events. Earnings reports, economic indicators, and geopolitical developments can significantly influence asset prices.
5. Continuous Learning: Embrace ongoing education to stay current on market trends, trading strategies, and industry developments. A commitment to learning enhances trading proficiency and adaptability over time.
Incorporating these key tips into your trading strategy will provide a solid foundation for navigating the dynamic landscape of Share CFDs with confidence.
Trading Share CFDs with VT Markets
Discover a wealth of share CFDs trading opportunities with VT Markets, offering access to over 800 leading companies from the US, UK, EU, and Hong Kong.
Leverage up to 20:1 to maximise your trading potential, taking both long and short positions for as low as $0 per trade. This flexibility empowers you to profit from fluctuations in share prices, whether they rise or fall.
Ready to embark on live trading? Open a live trading account with VT Markets for real-time market access. If you’re still refining your strategies, take advantage of the risk-free demo account. Test your approaches and get acquainted with the platform before committing real capital.
VT Markets provides a user-friendly experience for traders of all levels, ensuring you have the tools needed to navigate the dynamic world of share CFDs with confidence.
In conclusion, success in trading stocks and share CFDs demands a strategic approach, disciplined risk management, and continuous learning. Whether you prefer traditional stocks or the flexibility of CFDs, confidence stems from knowledge and a well-crafted strategy. Happy trading!
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
Falling UK wages provide optimism for the Bank of England.
Cable faces pressure due to USD strength.
Key Points from ONS Labour Market Overview:
UK wage growth decelerated in November.
Unemployment rate remained unchanged.
Despite slowing wage growth, it remains high enough to deter an immediate UK rate cut.
Latest UK Implied Rates:
First UK Base Rate cut anticipated in May.
Predictions indicate a total of 131 basis points in cuts for the upcoming year.
US Dollar Strength:
The US dollar shows strength after a long weekend.
US dollar index reaches a 10-day high.
Factors include slightly higher US Treasury bond yields and geopolitical concerns in Ukraine and the Red Sea.
GBP/USD Technical Levels:
Cable approaches a support level at 1.2667.
Potential breakdown may target the 38.2% Fibonacci level at 1.2628, prior lows cluster around 1.2610/15, and the 50-day simple moving average at 1.2608.
Upside movement may face resistance at 1.2742, with further hurdles near recent highs up to just under 1.2800.
Dollar reaches a one-month high, impacting various market sectors.
Bonds experience a fall as central bank officials resist aggressive interest rate cut expectations.
Stock and Futures Movement:
Stoxx Europe 600 index heads for a five-week low, led by declines in retailers and banks.
S&P 500 futures slip by 0.6%, Nasdaq 100 contracts drop by up to 0.9%.
Treasuries decline across the curve, with ten-year yields and the 2-year debt rising about six basis points each.
Central Bank Comments and Rate Cut Expectations:
European Central Bank Governing Council member Francois Villeroy de Galhau emphasizes it’s too early to declare victory on inflation.
Traders await Federal Reserve Governor Christopher Waller’s speech for cues on the timing of a Fed rate cut, with a two-in-three chance seen in March.
ECB Governing Council member Robert Holzmann and President Christine Lagarde express uncertainty about assured rate cuts, citing lingering inflation and geopolitical risks.
UK Economic Data:
Economic data in the UK supports the case for Bank of England rate cuts.
Wage growth cools at one of the fastest paces on record, leading to a weakening of the pound against the dollar.
Corporate Results:
Morgan Stanley and Goldman Sachs Group Inc. expected to report continued lull in investment banking activity.
High borrowing costs, geopolitical tensions, and recessionary risks dampen deal-making.
Global Economic Outlook and Oil Prices:
Oil prices remain steady amidst Houthi attacks in the Red Sea, contributing to tensions in the Middle East.
Global benchmark Brent holds around $78 a barrel, while West Texas Intermediate trades below $73.
MSCI Asia Pacific Index:
Slides 1.3%, halting a three-day rally.
Hang Seng Index faces the worst day in about two months due to property-sector funding plans impacting bank shares.
Upcoming Market Events:
Key events this week include Germany ZEW survey expectations, US Empire Manufacturing, and earnings reports from Goldman Sachs Group Inc. and Morgan Stanley.
Federal Reserve Governor Christopher Waller is scheduled to speak on Tuesday.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.
Economic data: Markets closed for Martin Luther King, Jr. Day
Earnings: Markets closed for Martin Luther King, Jr. Day
CURRENCIES:
Event Focus: UK Unemployment and Inflation Data
Major event risk from the UK includes upcoming releases of unemployment and inflation data.
US Market Dynamics: Lower Yields and Rate Cut Forecasts
US dollar maintains its trading range despite declining yields and heightened expectations for rate cuts.
US 2-year yield experiences a six-day decline, with markets predicting nearly 25 basis point cuts in each meeting from March to November.
Note: Potential rate adjustments by the Fed may be limited due to the proximity to the presidential elections.
US Dollar Basket Performance: Trading within Range
The US Dollar Basket, a proxy for USD performance, has been trading within a range for the past two weeks.
The significant resistance at the 103.00 level, coupled with the presence of the 200 and 50-day simple moving averages, limits the dollar’s upside potential.
Challenges for the USD: Declining Yields and Rate Cut Expectations
The USD faces challenges such as decreasing yields, a more imminent prospect of rate cuts, and easing price pressures.
Implied Fed Funds Rate: Market Expectations
Market expectations, as reflected in the implied Fed Funds Rate via the Fed Funds Futures Market, indicate anticipation of future rate cuts.
Despite slightly higher Consumer Price Index (CPI) readings last month, expectations suggest a continued drop in inflation.
USD’s current range-holding is attributed in part to its safe-haven appeal, particularly following joint US and UK strikes on Houthi targets.
Global Economic Outlook: Chinese Q4 GDP Data
Chinese Q4 GDP data is anticipated to provide insights into the global economic outlook.
Safe Haven Appeal of USD: Influenced by Geopolitical Events
USD’s safe-haven appeal is reinforced by geopolitical events, such as joint US and UK strikes on Houthi targets, contributing to its range-holding status.
Gold Performance: Notable Safe Haven Asset
Gold, a significant safe-haven asset, exhibited an increase over the weekend, aligning with USD’s safe-haven appeal.
Key Levels for USD: Resistance at 103.00
The USD faces resistance at the major level of 103.00, with the 200 and 50-day simple moving averages further contributing to this resistance zone.
Factors Influencing USD Range: Safe Haven Status
Despite various challenges, the USD’s ability to maintain its range is influenced by its safe-haven status, particularly in response to recent geopolitical developments.
STOCK MARKET:
Market Recap and Outlook:
Stocks resumed winning streak after a nine-week break to start 2024.
Nasdaq Composite led with a 3% gain; S&P 500 approached a record high.
Microsoft surpassed Apple as the world’s most valuable company.
Upcoming Focus:
In a holiday-shortened week, attention shifts to financial sector results and Wednesday’s retail sales data.
US markets closed Monday for Martin Luther King Jr. Day.
Retail Sales Forecast:
Retail sales expected to rise by 0.4% in December, exceeding the 0.3% gain in November.
Bank of America anticipates “robust” retail sales due to applied seasonal adjustments.
Economic Calendar:
Thursday: Initial jobless claims data.
Friday: University of Michigan’s consumer sentiment report.
Geopolitical Events:
Monday: Iowa caucuses mark the official start of the 2024 US presidential election.
Rising tensions in the Red Sea draw increased investor attention.
Earnings Reports:
Investment banks Goldman Sachs (GS) and Morgan Stanley (MS) set to report.
Focus on the investment banking story and the trajectory after a challenging year.
Inflation Insights:
Last week’s inflation data showed firmer consumer prices but moderated producer prices.
Red Sea-related disruptions noted as an “upside risk” to inflation forecasts.
Fed Rate Cut Expectations:
Investors price in a 77% chance of a 0.25% Fed rate cut in March.
Barclays economists expect incremental cuts starting in March but at a more gradual pace.
Earnings Season Kickoff:
Major money center banks, including JPMorgan, Wells Fargo, Bank of America, and Citi, reported results.
JPMorgan reported a nearly $50 billion record annual profit.
Tech Sector Focus:
The financial sector takes the spotlight initially, but the tech sector’s performance will be closely monitored.
Forward P/E ratio for the Technology sector stands at 27, second highest among S&P 500 sectors.
Magnificent Seven and Nasdaq Influence:
Results from “Magnificent Seven” tech giants, including Meta Platforms, Alphabet, Amazon, and Tesla, will impact the Nasdaq and overall market sentiment.
Negative guidance from tech sector companies above recent averages.
Sector Valuations:
Technology sector’s forward P/E ratio at 27, second only to Real Estate, which traded at 39.
Technology’s performance crucial as it accounts for over 28% of the S&P 500’s market cap.
Fourth Quarter Earnings Season:
The tech trade’s impact on overall market direction will be significant as the earnings season progresses.
Investor Sentiment:
The party for fourth-quarter earnings season begins when reports from the “Magnificent Seven” tech giants start rolling in.
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Written on January 15, 2024 at 10:06 am, by anakin
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