M+ Online Head of Research, Loui Low has presented on the weekly trading radar.

Brief intro

The US Fed’s meeting is finally around the corner with the consensus looking at an interest rate hike of 25 bps. We understand not only the US Fed will be having a meeting while the ECB is having a meeting in the same week as well.

What should we expect from these meetings?

We believe that the interest rate upcycle is to tackle the inflationary pressure while providing stability to economic growth going forward.

Hence, given the decline in the US CPI data as well as ECB CPI, we opine that this might be the final interest rate hike for the interest rate upcycle.

Also, do note that the MoM CPI has been stable (within the usual range before the pandemic) and the interest rate hike may take a pause after May’s meeting.

Sector focus

If the Fed is turning less hawkish in this meeting, we expect the rebound last week may sustain and the focus will be on the growth related sectors especially the technology-related stocks, translating to an upward trending move.

Meanwhile, the commodity sector may be impacted by the recent worries over potential recessionary pressure after the banking crisis. Crude oil has been trending lower over the past few days, but gold has spiked up above US$2000.

Traders’ radar

1. More than 75% of the corporate earnings reported recently under the S&P 500 have beat analysts’ expectations. Given there is a feel-good factor from the recent announcement of META, GOOG, AMZN and MSFT, Apple could be in focus as they will be releasing their results this Thursday. ETF that traders may focus will be AAPU, AAPD.

2. Traders may utilized QQQ, XLK or SPY for exposure within the technology sector. For leverage and inverse ETFs, sophisticated traders may trade on TQQQ, SQQQ.

3. In view of the 25bps hike by the Fed, Treasury Yield may have some interesting volatility for traders to pick up. Treasury yield related ETFs includes TMF, TMV, TYD, TYO.

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