A guide to CFD share trading with a roundup of US and European stocks for 2023, for those interested in starting iFOREX share trading now.

Traders on the stock market have witnessed an explosive start to the year, as they found themselves sitting somewhere in the middle of aggressive interest-rate-hiking schedules both in Europe and the USA. European stocks recorded their best ever first fortnight in a year, inspired by better inflation data, China’s economic reopening, and the relatively warm weather which helped save the region from an energy crisis.

February started on a positive note for Europe’s Stoxx 600 index, and it achieved a huge 20% improvement on its level back in September. As week number two ticked over, however, the index lost 0.8%, dragged down by the technology, retail and real estate sectors. An impressive-looking jobs report in the US had encouraged the feeling that the US Federal Reserve would continue with hawkish policy, which weighed bearishly on shares in Europe.

In this article, we’ll give an introduction to online CFD share trading in general, and also offer some of the freshest views on where stocks may be headed on both sides of the Atlantic. The aim is to assist the initiated in their CFD trading, but also to guide those who may be interested in starting iFOREX share trading now.

CFD Share Trading

The first stock markets appeared in port cities like London, Antwerp and Amsterdam in the 1500’s and 1600’s, and they were secondary markets where shareholders could meet with potential buyers. A share, or stock, or equity, refers to a financial instrument that represents a certain degree of ownership in a company. A shareholder owns a portion of the company, the size of which depends on the number of shares he owns. The reason companies are motivated to issue shares is so that they can raise capital to expand.

With the more recent advent of online trading, it became possible to efficiently trade in company shares with the use of only a small electronic device and an internet connection. What followed was the opportunity to trade in the share price movements of major companies like Apple, Tesla or Ford, without having to actually purchase the shares. One advantage of this kind of trading – called CFD (contract for difference) trading – is that it positions you to earn from both upturns and downturns in share prices. This contrasts with share ownership, which would be adversely impacted by slumps in the stock market.

CFD share trading is done through mobile trading apps like the iFOREX platform, which do more than simply connect you to the world’s financial markets: They give you live updates, keep you informed of the highest and lowest stock prices, and give you access to financial chart patterns.

European Stocks

Analysts had different feelings about whether the gains in European stocks would keep on chugging along as February rolled forward. Morgan Stanley thought that their late excellence was “now tactically quite stretched” even in mid-January. At the same time, they expected continued progress because of warming sentiment toward China after its about-turn on Covid policy, and also the relatively low-priced valuations of these stocks. In February, and by contrast, JPMorgan Chase & Co. tended to think that stock valuations should not be considered stretched, in spite of their recent upsurge.

US Stocks

The S&P 500 index tracks the 500 biggest companies in the USA and, therefore, offers a useful gauge of the overall US stock market. Last year, it dropped the most it had done since the 2008 financial crisis, weighed down by the tech and communications sectors, which are particularly sensitive to interest rates.

In the first three weeks of 2023, though, those same sectors pulled off big rebounds, propelled by the conviction that improving inflation figures would lead the Fed to soon embrace a more dovish policy. “I’m optimistic on US equities this year, but the biggest risk for stocks is if the Fed over-hikes”, suggested Mark Newton of Fundstrat Global Advisors.

The Landscape Ahead

Fed spokesmen in early February wanted to make “a concerted effort to weigh against very risk-friendly interpretations” of Fed chief Jerome Powell’s recent speech, in the words of Bloomberg. In other words, the Fed wanted to firmly announce that policy was going to remain hawkish for the moment.

This is a bearish factor that will hold back US stocks in the near-term, especially given that many analysts viewed them as overbought, a week into February. “We continue to expect market volatility” as the year progresses, says Stephen Auth of Federated Hermes.

Volatility is the stock-in-trade of CFD traders, so, if you’re interested in starting iFOREX share trading now in CFD form, check out the iFOREX platform, which is well-known and well-liked in the world of online trading. On the platform, there’s a whole range of helpful tools to keep you on the cutting edge, including, not only the highest and lowest stock prices, but also a steady stream of relevant financial news.