Robust Economic Recovery Against Interest Rate Spike Concern

 Summary of content for the week of  Mar 26:

1. Week 12 major indexes performance;

2. Week 12 US sector indexes performance;

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

U.S

U.S stocks rallied on Friday to finish higher, bring SPX and DJI index into positive returns for the week, while Nasdaq(#COMP) also rallied more than 1% on Friday but the technology dominant index still ended the week down 0.58%. 

The Fed said it will end restrictions on dividends and buybacks on stocks, which benefited already very strong financials after the recent rise in interest rates. The latest round of stimulus checks has been given out since last week, which is likely to boost consumer spending in the coming weeks and months. 

10-year treasuries were relatively calm for the week, cyclicals and growth stocks found support. Energy stocks also traded higher as crude oil prices rebounded as the key global trade route of the Suez Canal continuing to be blocked. Communication services and Consumer Discretionary stocks lagged as the FAANG stocks (FB,AAPL, AMZN, NFLX, GOOGL) +TSLA all have been in a large consolidation range with no clear direction. Refer to below SPY sector indexes weekly performance table for details.

Technically, U.S three major indexes uptrend well intact. 

China/HK

China SSE index recoded a weekly gain, as it rallied on Friday after the Central bank signaled it was not about to tighten monetary policy. SSE index appears found its support at 3400 level after its four-week down streak . HK listed China mainland stocks also performed strongly, particularly property services and real estate management stocks. China and HK also experiencing rotating from growth stocks to value stocks like other major markets. 

HSI index was the worst-performing index in my major indexes weekly performance table below. It spiked down below 28000 level middle of the week but rebounded up to its breakdown level at 28330, as technology and other growth stocks under selling pressure. 

Singapore

STI closed higher for the 5th week in a row, as the majority of banks and cyclical stocks dominant index continues to benefit from rising interest rate and rotation from growth to value stocks. 

Rising Bond Yield and Leverage Ratio for Banks

 Summary of content for the week of  Mar 19:

1. Week 11 major indexes performance;

2. Week 11 US sector indexes performance;

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

U.S

U.S major indexes continued to move to record highs early in the week(DJI and SPX both registered new highs) but then lost ground as the 10-year bond yield reached its highest level in over a year to a high of 1.75%. Energy stocks fell sharply as crude oil price(WTI) saw its biggest daily drop on Thursday since last summer, seemingly driven by rising U.S inventories and demand concerns.

Financials-the banks fell back on Friday after the Fed announced it was not extending a rule that relaxed the leverage ratio for banks during the pandemic, which expired at the end of the month. The announcement placed significant pressure on the Financial sector.

Statement after the Fed's two-day meeting reiterated its dovish monetary stance, anticipated no rate hikes until 2023, and showed their confidence that the increase in inflation will be short-lived. So on Friday, there was this change of sentiment in the technology and financial sectors. For the week, Communication Services(XLC) led by FB outperformed, whereas the Financials(XLF) and Energy(XLE) sectors lagged. Refer to below SPX sectors weekly performance table for details.

Technically, the three major indexes' weekly charts uptrend still intact.

China/HK

China SSE index underperformed other major markets on Friday and erased the previous four-day gain to end 1.4% down for the week. As negative headlines about the first day's talks at the U.S.-China meeting in Alaska, with each side criticizing the other. SSE index registered 4th week down in a row. However, Hong Kong's HSI index appeared to be stabilizing after a two-week down, recorded a 0.87% gain for the week. Both SSE and HSI weekly charts are still uptrend technically. 

Singapore

STI outperformed this week with a 1.27% gain, refer to below major indexes weekly performance for details, registered its 4th week up in a row. Watch out for the possible rotation back from financials to technology stocks in the coming week(s) as the effect that the Fed will not extend leverage ratio on banks(refer to the above U.S section). Technically, STI immediate major resistance at 3285 and immediate support at 3100 level. 

Biden Signed US$ 1.9 Trillion ARP, Stocks Expected to Go Higher

 Summary of content for the week of  Mar 12:

1. Week 10 major indexes performance;

2. Week 10 US sector indexes performance;

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

U.S

U.S stocks started the week on a down note as the 10-year U.S Treasury note stayed near one-year highs. Bond yield retreated over the following days, which seemed to provide a lift to sentiment. All the three major U.S indexes ended the week higher, DJI and SPX closed out new highs, Nasdaq participated but still way below its recent high. 

Obviously, we can see the out of sync in sectors. DJI which dominated by cyclical sectors such as the Financials are very bullish, and Nasdaq which dominated by Tech stocks are under selling pressure due to high-interest rate and inflation expectations which will have a bigger discount on their futures earnings. There is no crash on stocks but just sector rotation, bulls are expected to charge higher, we see early signs that investors put interest rates behind after a recent retreat and will get attracted to tech stocks again. 

Technically, the three indexes' major uptrend is still well intact, with no breach of their uptrends. (Refer to below major indexes weekly charts). With improving economic data and accommodative both fiscal and monetary policies, we see the bull markets most probably will continue. 

China/HK

China's SSE index posted a 3rd weekly loss as it fell 1.4%. Technically SSE closed at its technical support 3450, major uptrend on its weekly chart still well intact, expected the index to bounce back after the recent retreat. Hang Kong's HSI index was down for 2nd week, indexes had been on recovery mode till turned south abruptly on Friday, while Bloomberg reported the heavyweight tech giant Tencent(700.hk) would be the next target in the list of China's top anti-monopoly measure, after Alibaba(9988.hk). 

Singapore

STI hit my immediate target level of 3100 which set two-week ago. The next major technical resistance at 3300, can pay attention to top local Semicon stocks after the recent retreat, such as AEM, UMS, Frencken, and Venture.

Rising Yield Continue to Dominate Sentiment

 Summary of content for the week of  Mar 5:

1. Week 9 major indexes performance;

2. Week 9 US sector indexes performance;

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

U.S

U.S three major indexes finished mixed for the week ended Mar 5, as long-term interest rates continued their ascent. U.S 10-year treasury yield closed at 1.55% on Friday, temporarily higher than SPX dividend yield of 1.52%. The rise in rate again weighted on growth stocks by increasing the discount on future earnings, while value stocks performed much better. 

As for SPX 11 sectors, Energy(XLE) outperformed as oil price hit highest to 66.28(WTI) in over a year, Financials(XLF) and Industrials(XLI) also are among top-performing sectors. Technology(XLK) was broadly weak, and Consumer Discretionary(XLY) was the weakest dragged lower by Telsa(TSLA). Refer to the below sector indexes weekly performance table for details.

Rising interest rates are not all viewed as a bad thing, as Fed Chairman Jerome Powell said it's a statement of confidence for a robust recovery. Markets seemed divided about whether the rise in 10-year bond yield was due to an upbeat growth expectation or a worrisome increase in inflationary pressures. Stocks on Friday had a very volatile session, eventually finished much higher after initial sharp sell-off, accompanied by obvious higher than average volume. Following are major events: 

1. Nonfarm payroll reported 379k for Feb, roughly twice estimates. Nearly all gains in jobs came in leasure and hospitality industry, especially restaurants.

2. Biden's USD 1.9 trillion stimulus package passed.

3. OPEC to maintain current production levels instead widely expected increase sent oil price higher. 

Technically, among the major three U.S equity indexes, DJI appears to be the strongest as it tested 50dma on Thursday and rebounded back above its 20dma, uptrend is well intact. SPX had a breakdown below its 50dma, rebounded and recovered all its losses on Friday, shut the shorts off with a close above 50dma. Nasdaq(COMP) the weakest one among the three, still away below its 50dma despite sharp "V shape" rebound from its early sold-off. 

China/HK

China SSE had gap-down and Friday as rising U.S yields and inflation expectations spilled into China's stocks, but it managed to recover almost all its losses on close, ended the week flat. China's top regulator officer warned about financial bubbles in the foreign markets. Overall, Chinese stocks were cautious ahead of the annual National People's Congress(NPC), which kicked off on Mar 5. NPC unveiled China's official 2021 growth target of above 6%, a goal widely seen as conservative. 

Technically, both SSE and HSI indexes are above their key technical support levels. HSI index rebounded and closed above its 50dma and the SSE index closed above 3450-3500 support area.

Singapore

STI continued to be the best performer in my weekly indexes table for the second week in a row. Singapore's three local banks led the rebound. The index appears to be bullish and the next immediate target level is at 3100.