Monetary Policy Tightening Eased, Stocks Hit Fresh New Highs

 Summary of content for the week of Jun 25:

1. Week 25 major indexes performance;

2. Week 25 US sector indexes performance;

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

U.S

U.S major indexes finished mostly higher for the week ended Jun 25, recorded solid gains and fresh record highs. The SPX and Nasdaq Composite index hit new highs, while DJI fully recovered its previous week’s loss and very near to its recent high. Refer to major indexes weekly performance table below.

Major events happened during the period:

1.    A US$1.2 trillion infrastructure reached on Friday between the White House and bipartisan group of Senators buoyed market sentiment. 

2.    Fed chair’s testimony to Congress on Tuesday, reiterated Fed’s belief that recent spike in inflation will prove temporary, seems to reassure investors. 

3.    All 23 banks passed the annual stress test, clearing the way for lifting the pandemic-related restrictions on dividends and share repurchases. Analysts looking for dividend hikes in the 3Q, and significant acceleration in share repurchases.

Within SPX 11 sectors, Energy(XLE) and Financials(XLF) were top-performing sectors, while Utility(XLU) lagged. Refer to below weekly sector indexes for details.

Technically, the three major indexes' weekly charts remain in strong uptrend. Refer to below major indexes weekly charts.

China/HK

China SSE index added 2.3% for the week, ending a three-week losing streak. Financial stocks led the rally after the People’s Bank of China (PBoC) injected liquidity into the financial system for the first time since February.

Renewable energy names did well after China's National Energy Administration announced that over 50% of rooftop spaces on government buildings would be reserved for solar panels. China now top global clean energy market player, CSOP Asset just launched the first ETF tracking CSI Photovoltaic Industry Index in mainland China. Trading in HKEX, stock code 3134.HK.

Hang Seng Index(.HSI) also reversed its three-week losing streak and closed at around the top of its three-month price range.

Singapore

STI index closed with a modest loss for 2^nd week but still within its five-week trading range from 3104-3194. Singapore's three local banks which account for 40% of the STI index have been in sideway consolidation mode after recent profit-taking. It’s expected the banks will have its pandemic-related dividend restriction lifted this year, which will be positive for bank stocks.

STI weekly chart in range-bound, immediate resistance at 3194 recent high and major support at 3104 recent low.

Headlines Focus on Fed’s Hawkish Outcome, Cyclical Stocks Fell

Summary of content for the week of Jun 18:

1. Week 24 major indexes performance;

2. Week 24 US sector indexes performance;

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

U.S

U.S major indexes finished another week solidly lower for the week ended Jun 18, with DJI and SPX recorded sharply weekly losses and the technology-heavy Nasdaq erasing its gains for the week. The DJI includes many cyclical companies mostly are reliant on economic growth. On the other hand, the Nasdaq(COMP) posted a much more modest loss. Refer to major indexes weekly performance table below.

Major events happened during the period:

1.    Fed’s Jun 15-16 meeting outcome came in as surprisingly hawkish. Fed officials have begun to discuss slowing the central bank’s bond purchases(stimulus), the first step toward eventually raising interest rates. 

2.    Fed signaled that it anticipates two rate hikes by the end of 2023, indicating a faster pace of tightening than in earlier projections.

Within SPX 11 sectors, Large-cap stocks help up better than small-cap. Growth stocks easily outperformed value as investors sold companies in the energy and financials sectors amid fears that the Fed will remove its accommodative policies and raise rates sooner than markets had anticipated. Technology(XLK) outperformed, and Financials(XLF) and Materials(XLB) lagged. Refer to below weekly sector indexes for details.

Technically, the three major indexes weekly charts remain in strong uptrend. Refer to below major indexes weekly charts.

China/HK

China SSE index fell for a third week. New energy vehicle (NEV) stocks rallied on Friday after an official at the 2021 China Association of Automobile Manufacturers projected that the NEV share of new vehicles would increase from 20% to 30% within five to eight years. Industry data showed a NEV penetration rate of 12.0%, a historic high, while domestic NEV sales in May jumped 8.3% from April and more than doubled from a year ago.

Hang Seng Index(.HSI) also fell for third week as well but have recovered most of earlier losses in the week as stocks rallied on Thu and Fri. Immediate major technical support to watch 28000.

Singapore

STI index closed with modest loss this week but still within its four-week trading range from 3104-3194. Singapore will relax its COVID-19 restriction slightly from coming Mon Jun 21 onwards, allowing up to two-person dining in, among other measures.

STI weekly chart in range bound, immediate resistance at 3194 recent high and major support at 3104 recent low. 

Stocks Hovered Near Record, Inflation Soars, Bond Yield Fell

Summary of content for the week of Jun 11:

1. Week 23 major indexes performance;

2. Week 23 US sector indexes performance;

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

U.S

U.S major indexes finished mixed for the week ended Jun 11, a sharp decrease in longer-term yields appeared to help push the SPX index to a record high. The declined in yields favoured growth stocks by reducing the implied discount on future earnings while weighing on financials by threatening banks lending margins. The tech-heavy weighted Nasdaq outperformed and recorded its 4^th week up in a row, while DJI recorded a modest loss. Refer to major indexes weekly performance table below.

Major events happened during the period:

1.    Interest rate and inflation seemed to continue to dominate sentiment. Fed assured they would keep monetary policy highly accommodative for “some time” and that the recent spike in inflation would prove temporary. 

2.    Core Consumer Prices( CPI) reported on Thursday to reach a 13-year high of 5%. 

3.    Senate reached a deal on an infrastructure plan include US$762 billion in new spending, significant less than US$2 trillion Biden originally requested, this plan would not raise corporate taxes.

Within SPX 11 sectors, Health Care(XLV) stocks outperformed. Financials(XLF) lagged. Refer to below weekly sector indexes for details.

Technically, the three major indexes weekly charts remain in strong uptrend. Refer to below major indexes weekly charts.

China/HK

China SSE index fell for a second week. News that the authorities in Guangzhou renewed COVID-19 controls in the face of a fresh outbreak in the week. In response, Macau banned nonresidents from entering via neighboring Guangdong province, causing casino stocks to weaken.

China’s Producer Price Index(PPI) rose to 9% yoy from 6.8% in April due to higher commodity prices. 

Hang Seng Index(.HSI) fell for 2^nd week as well but consolidating within its three-week price range. Immediate technical support at 28700 level.

Singapore

STI index closed with modest gain this week. Singapore shares gained ground this week after government announced to easy Covid-19 restrictions from next Mon onwards.

STI weekly chart in range bound, immediate resistance at 3237 recent high and major support at 3024.

 

May Job Report, Meme Stocks Grab Headlines

Summary of content for the week of Jun 4:

1. Week 22 major indexes performance;

2. Week 22 US sector indexes performance;

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

4. Major indexes monthly performance for May

U.S

All three U.S major indexes closed moderately higher for the week ended Jun 4. It’s at the end of the month of May, both DJI and SPX closed 4^th week up in a row, but technology-heavy Nasdaq Composite Index(COMP) closed down. Refer to major indexes weekly and monthly performance tables below.

Major events happened during the period:

1.    Closely watched May nonfarm payrolls report on Friday shows a total of 559k jobs added in May, somehow below the 650k consensus forecasts. On the other hand, this was double the payroll gains in Apr, signaling that hiring momentum is building as the reopening progresses. That’s why stocks reacted positively and closed at a weekly high. 

2.    Crude Oil prices reached their highest level in more than two years. WTI crude oil price closed at 69.41 per barrel for the week. 

3.    “Meme” stocks- small-cap, consumer-oriented shares actively discussed on social media, under the spotlight. Shares such as AMC, BlackBerry(BB) experienced particularly heavy trading and volatility.

Within SPX 11 sectors, Energy(XLE) performed best as oil prices hit a new high. Consumer Discretionary(XLY) and Healthcare(XLV) lagged, Consumer Discretionary shares weighed down by a decline in Tesla(TSLA). Refer to below weekly sector indexes for details.

Technically, the three major indexes' weekly charts remain in strong uptrend. Refer to below major indexes weekly charts.

China/HK

China's SSE index retreated after a three-week rally in a row. SSE index was down 0.25% in the week. China surprisingly announced on May 31 that it would relax the current two-child policy and allow a three-child rule, many economists believe that the measure will do little to alter the trajectory of the country’s looming demographic crisis.

Hang Seng Index(.HSI) retreated this week after two-week up in a row. Both China SSE and .HSI indexes weekly charts are bullish.

Singapore

STI index retreated after a two-week gain streak. ASEAN-EU sealed the world’s first bloc-to-bloc air transport pact this week, which will enhance air connectivity between ASEAN and Europe. Positive for Airlines and related stocks.

STI weekly chart in range-bound, immediate resistance at 3237 recent high and major support at 3024.