Inflation Data Again Surprise On the Upside, Stocks Down

Summary of content for the week of Jul 16:

1. Week 28 major indexes performance;

2. Week 28 US sector indexes performance;

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

U.S

For the week of the end of Jul 16, U.S major indexes ended the first week lower after three consecutive weeks up, but the SPX and Nasdaq(COMP) reached a new intra-week high before falling back. Small caps and value stocks further surrendering its leadership over large-cap SPX and technology stocks. Refer to major indexes weekly performance table below.

Major events for the week:

1.    Growth and inflation data appeared to remain in the spotlight during the week. Core consumer prices reported jumping 0.9% in Jun, roughly twice consensus estimates. 

2.    Fed Chair repeated his view on scheduled testimony before Congress on Wednesday, that inflation pressures are temporary. Before raising interest rates, the Fed is widely expected to begin tapering asset purchases designated to keep downward pressure on long-term rates.

Among SPX 11 sectors, defensive sectors Utilities(XLU) and Consumer Staples(XLP) outperformed, while Energy(XLE) lagged. Refer to SPX sector indexes weekly performance below.

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

China/HK

China SSE index closed higher for the week. China on Thursday reported 2Q GDP growth of 7.9%, down from 18.3% in 1Q, in line with expectation. Foreign investors bought technology, financial, and consumer stocks with solid fundamentals, avoiding expensive theme plays like electric vehicles, according to traders.

Hang Seng Index(.HSI) was the best performer this week, rebounded after the previous week’s hard selloff. Technically, SSE index was in consolidation range hovering around its 50dma, and .HSI index got supported from its 200dma at 27730 level. Both indexes remain bullish on their week charts.

Singapore

STI index closed slightly higher for the week. Its weekly chart in range-bound, immediate resistance at 3194 recent high and major support at 3104 recent low.