OREANDA-NEWS. The Federal Reserve on Wednesday raised its key interest rate from 1.5% to 1.75%, the first of three expected rate hikes in 2018, citing an improving economic outlook. The Fed continued to project three rate hikes this year but forecasts a steeper path of hikes in 2019 and 2020.

While the official forecast remains at three rate hikes this year, the 15 Fed board members were divided over the outlook for the benchmark interest rate in 2018. Seven board members projected at least four quarter-point hikes this year while eight expected three or fewer hikes this year.

In the forecasts, the board members also projected a median federal funds rate of 2.9% by the end of 2019, implying three rate increases next year, compared with only two 2019 moves seen in the last round of forecasts in December 2017.

Markets rose after the Fed announcement, but flattened by Wednesday's close, with the DJIA and the S&P 500 both down 0.18%.

SGX lists 6 ETFs tracking the US market. Of these 6 ETFs, 2 of the ETFs track the S&P 500 index, including the DB X-TRACKERS S&P 500 UCITS ETF and the SPDR® S&P 500® ETF. SGX also lists the DB X-TRACKERS S&P 500 INVERSE DAILY (-1X), an inverse product.

On 22 March Thursday, upon the interest rate announcements, the SPDR® S&P 500® ETF closed down -0.55%, while the DB X-trackers S&P 500 Inverse Daily (-1X) closed up +0.33%. Tabled below are the details of the ETFs:

Name

Stock Code

Total Return MTD %

Total Return YTD %

Total return 12M %

Inverse ETF

        

db x-trackers S&P 500 INVERSE DAILY (-1X)

HD6

1.02

 (2.53)

-19.46

Long ETFs

        

Lyxor ETF Dow Jones Industrial Average

JC6

-3.72

-2.05

14.24

SPDR® Dow Jones Industrial Average ETF

D07

-3.71

-2.4

14.48

SPDRs® S&P 500® ETF

S27

-2.24

-0.9

10.12

db x-trackers S&P 500 UCITS ETF

K6K

-2.28

-0.71

10.01

db x-trackers MSCI USA Index UCITS ETF

KF8

-2.15

-0.52

10.34

Lyxor ETF Nasdaq-100

H1Q

-2

4.17

20.22

Average (Long ETFs)

  

-2.7

-0.4

13.2

Source: Bloomberg as of 22 March 2018

Investors who want to gain leveraged exposure to the US market may do so via the S&P 500 warrants listed on SGX. Tabled below are the details of the S&P 500 warrants:

Name

Stock Code

Call/ Put

Expiry Date

Strike Level

S&P 2800MBeCW180618

CMEW

C

18-June-18

2800

S&P 2400MBePW180618

CMFW

P

18-June-18

2400

Source: SGX

China’s Central Bank Raises Borrowing Costs after the Fed’s Rate Hike

Following the Fed’s interest rate hike, the People’s Bank of China raised interest rates on Thursday on 7-day reverse repurchase agreements, used for open market operations by 5 basis points. The move increases the cost of short-term loans to commercial lenders to help China stay in step with the Fed’s tightening.

Among the most active HSI warrants, Hang Seng Call Warrant (CQZW) was down -19.4% on Thursday while Hang Seng Put Warrant (CRKW) was up +12.5% based on the last bid price at 4pm (HKEx market close).

For the Daily Leverage Certificates (DLCs) on the HSI, the 7x Long HSI DLC (CPRW) was down -8.1% on Thursday while the 7x Short HSI DLC (CPSW) was up +7.1% based on the data published by Societe Generale.

Tabled below are the details of some of the actively traded Hang Seng Warrants and DLCs on Thursday:

HSI Warrants - Most Actives 

Name

Stock Code

Call/Put

Expiry Date

Strike Level

HSI 30800 MB ePW 180427

CRKW

P

27-Apr-18

30,800

HSI 29800 MB ePW 180427

CRAW

P

27-Apr-18

29,800

HSI 32600 MB eCW 180427

CQZW

C

27-Apr-18

32,600

HSI 28800 MB ePW 180427

CQWW

P

27-Apr-18

28,800

HSI 31600 MB eCW 180427

CQUW

C

27-Apr-18

31,600

Source: SGX

HSI and HSCEI DLCs  - Most Actives 

Stock Code

Counter Name

Underlying Index

Type

Leverage

Issuer 

Airbag Level 

CPRW

DLC SG7xLongHSI 210114

HSI

Long

7x

SG

-10%

CPSW

DLC SG7xShortHSI 210114

HSI

Short

-7x

SG

10%

CPTW

DLC SG7xLongHSC 210114

HSCEI

Long

7x

SG

-10%

CPUW

DLC SG7xShortHSC 210114

HSCEI

Short

-7x

SG

10%