Markets Hate Uncertainty In Short Run

Summary of content for the week of  Oct 23:

1. Week 43 major indexes performance;

2. Week 43 US sector indexes performance;

3.Major indexes weekly charts of support and resistance levels;

U.S

The SPX ended modestly lower after three consecutive week advances. Headlines focused news flow around the fiscal relief negoniation before the election, which is just around the corner. Market behaved in a somewhat oderly fashion for the week, fluctuating in a narrow band. However, do expect to brace for a bumpier ride as we approach to and through, the election. Based on historical experience, markets hate uncertainty in the short run, but are not partisan over the long run.

Major Events in Focus:

10-year Treasury yield rose to highest level in four monts, as expectations that a potential Biden win for a larger relief package to support the economy.

Housing market continued to be strong, and also improved jobless claims with supportive Fed policies, fiscal stimulus package after the election will lead to sustained economic expansion in the coming years. All these will support a bull market in our view.

Earnings Reporting season for the week and coming weeks. Major companies such as SNAP surged on surprised profits, provide a tailwind to Twitter(TWTR). Coming week, heavyweight such as AMZN, AAPL, MSFT, GOOGL, V, MA will report their earnings, click (HERE) for details.

Among 11 SPX major sector. Communication Services(XLC) outperformed for the week, helped by gains in internet giants FB and Alpharbet(GOOGL).  Technology stocks( XLK) performed worst, dragged lower by Apple(AAPL). Refer to below sector performance table for detail dates.

China/HK

Chinese stocks retreated for the week, but still within its three-month consolidation range. China reported its GDP expanded 4.9% in 3Q, along with other data, offered further evidence that China's economy recovery  gaining momentum. By comparison, U.S and EU remains below pre-pandemic levels for their industria activity. 

Alibaba(BABA) began promotions for "Single Day"-the largest shopping event on Nov 11 each year. Last year, Alibaba's GMV(gross merchandise value) totaled RMB 268.4 billion or about 38.3 USD billion. By comparison,2019 "Black Friday" online sales in U.S totaled 7.4 USD billion. 

Ant Group IPO is said will start application on Oct 27-30, and start trading on Nov 6. Will be the world largest IPO in history. 

Singpore 

STI appears found footing above 2500 level after having been closed above it for three-week in a row. Immediate technical support to watch 2520 and resistance at 2600. Refer to below major indexes weekly performance table and weekly charts.

Fiscal Stimulus Hopes Diminish Further

Summary of content for the week of  Oct 16:

1. Week 42 major indexes performance;

2. Week 42 US sector indexes performance;

3.Major indexes weekly charts of support and resistance levels;

U.S

The SPX finished slightly higher for 3rd week in a row as investors continue to hope for a fiscal stimulus package despite an up and down week of trading. The indicisive weekly candlestick is also a reflection of a tug-of-war between rising concerns and encouraging economic data. Technically, stocks still in uptrend and outlook is positive in our view, with support from economic growth, corporate earnings and interest rates.

Positives:

-Retail sales continue to be a bright spot, beat forcast in Sep despite the lack of renewed government aid, signaling some resiliency to the recovery.

-Pfizer was preparing to seek emergency use of its vaccine as soon as Nov lifted market for hoping of vaccine.

-Fed is likely to keep interest rate near zero through 2023. Also has committed to continued purchases of bond to keep borrowing costs low.

Negatives:

-Unemployment remains high; 

-Coronavirus worries dampen sentiment by continued rise in cases in the U.S and EU.

-Bipartison negotiations in stimulus lack of progress. 

Within the SPX 11 main sectors, Industrials(XLI) and Utilities(XLU) outperformed, while Financials(XLF), Energy(XLE) and Real Estate(XLRE) lagged with weekly losses. Refer to below SPY setor index weekly performance table.

China/HK

Chinese stocks rallied after returned from national Golden Week holiday. SSE index was the best performing index with 1.96% weekly return, refer to below major indexes weekly performance table. Technically, SSE index outlook is bullish, has been within its 3-month sideway consolidation range. China's trade data last month beat forcasts and grew for 4th straight month. HSI index rebouned for 3rd week in a row, immediate technical support at 24000 level. 

Singapore

STI closed flat after two-week up in a row. Immediate technical support is 2520. STI's YTD negative return of 21.4% make it the one of the worst performing index in the region. On the other hand, we believe outlook for Singapore economy still positive and it will catch up eventually, Singapore bluechips are offering attractive valuation at current price level. 

Hoping For Another Round of Fiscal Stimulus

Summary of content for the week of  Oct 9:

1. Week 41 major indexes performance;
2. Week 41 US sector indexes performance;

3.Major indexes weekly charts of support and resistance levels;

U.S

The SPX index had its best weekly gain in three-month, as investors seems to grow more optimistic about about a new round of fiscal stimulus, as well as vaccines for the coronavirus. Nasdaq(COMP) index had 4.56% gain in the week, was the best performer in my weekly indexes table below. YTD, COMP has been best performer with 29% return. In Asia, SSE index also recorded 7.3% return, but STI and HSI was the two laggers with -21.4% and -14.4% respectively. However, we see attractive value in STI and HSI, and believe they will catch up eventually.

Stimulus hopes boost sentiment despite conflicting signals. The off and on-again negotiations between Republican and the Dems over coronavirus relief package was in focus. 

Trump's seemingly rapid recovery following his Covid-19 diagnosis the previous week also seems boost sentiment. Hopes rise for a vaccine treatment soon. 

China/HK

China's stock markets rose on Friday after being closed from Oct 1-8 for the national Golden Week holiday. SSE index was in trading sideways within its three-month consolidation range. While HSI index rebounded for 2nd week, back above its 24,000 level. 

Singapore

STI had 2nd week up in a row. Recouped 2500 level which is a bullish sign. Immediate support to watch at 2520 and resistance at 2600.

Trump's COVID-19 Positive Test Hampers Stocks

 Summary of content for the week of  Oct 2:

1. Week 40 major indexes performance;
2. Week 40 US sector indexes performance;

3. Major indexes monthly performance for Sep

4. Major indexes weekly charts of support and resistance levels;

U.S

U.S stocks finished lower, but still managed to post weekly gains, amid ramped-up concerns about COVID-19 after President Trump and First Lady tested positive for the virus. Other major events including 1) Sep employment report shows that job recovery has slowed. 2) A new round of fiscal stimulus remains in limbo as Republicans and Democrats continue to negotiate a deal.

Major indexes posted first monthly decline in Sep since Mar rebound. U.S three major indexes closed first month down after 5-month up in a row since Mar low rebound. Refer to the below indexes monthly performance table for September. 

SPX sector performance. Most SPX sectors closed with modest positive returns, with the exception of energy stocks(XLE), which added to their sharp recent declines, down another 2.88% for the week. Financials(XLF) and smaller Real Estate sector(XLRE) among top performers for the week, with 3.45% and 5.08% gains respectively. Refer to below weekly sector performance table.

China/HK

China and HK stocks closed lagging behind in the holiday-shortened week. With China stocks closed from Oct 1-8 for National Day "Golden Week" holiday, and HK stocks closed Oct 1-2 and resume trading coming week.  

Ant Group IPO. Chinese fintech company Ant Group under billionaire Jack Ma, which could raise up to USD 30 billion in a HK and Shanghai dual listing set to happen in the coming weeks.

Singapore

STI rebounded this week and closed slightly below 2500 level, as it had a knee-jerk reaction after Trump's positive test on the virus, but it managed to recover most of its losses on Friday close. Going forward, watch immediate technical support at 2446 and resistance 2520 level. At the current level, it's expected the index should have limited downside risk and blue-chips such as the banks appear to be very attractive.