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.