Biden's $1.9 Trillion Recovery Plan Failed to Lift Stocks

  Summary of content for the week of  Jan 15:

1. Week 2 major indexes performance;

2. Week 2 US sector indexes performance;

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

U.S

U.S stocks fell slightly this week ahead of a three-day holiday weekend, as disappointing data and mixed earnings, appeared to shrug off Biden's $1.9 trillion recovery plan. U.S equity markets will be closed for a public holiday on coming Monday. Below are major events highlights and their implications for the week:

1. Joe Biden announced a $1.9 trillion stimulus plan to counter the effects of COVID-19, which is about 9% of GDP. The plan will accelerate the recovery in the economy and add to the already excessive supply of bonds, benchmark 10-year Treasury yields have risen steadily to 1.087% from below 1% started the year. 

2. Stock Selection: Steep yield curve is good for financial-sector stocks such as banks, also economically sensitive sectors such as industrials, energy and materials. While defensive sectors such as utilities, real estate and consumer staples lagged historically. The Technology sector has performed well historically during rising and falling rates due to its strong earnings delivery.

3. Q4 earnings season kicked off this week. JPMorgan(#JPM), Citi(#C), Wells Fargo(#WFC) reported mixed results. 

Technically, the SPX index closed the first week down after a three-week up streak, off the peak after hitting a new record high the previous week. Uptrend is well intact but facing short-term downside risk. 

China/HK

Two weeks into the new year 2021, the three major Asia indexes in my table below i.e .HSI, SSE and STI have seen obviously better performance than the U.S three, with at least 2% YTD return each while the U.S three recorded less than 1% return separately. We expect this trend to be continued this year as the underperformed Asia stocks appear more attractive as compared to the already rocket-high U.S stocks. 

China's SSE index fell after four-week up in a row. U.S added another nine Chinese companies to its investment blacklist, total to 44 names. Alibaba(BABA, 9988.HK) and Tencent(700.HK) were volatile on report they too would be added to the list. Xiaomi(1810.HK) fell sharply on Friday on its unexpected addition to the list. 

HSI index has been rallied three-week in a row, very bullish, the index expected to play catch-up this year after the under-performed previous year. 

Singapore

STI had a very strong start in the year 2021, has been the best performer in the first two weeks with 5.66% YTD return. Technically it appears more room to upside move. Immediate target level 3100 in the coming weeks. Refer to below major indexes weekly performance table and weekly charts.