Stocks Tumble Amid Covid New Variant Flare-Up

Weekly Wrap Content for the week of Nov 26:

1. Week 47 major indexes performance;

2. Week 47 US sector indexes performance;

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

U.S

For the week ended Nov 26, stocks declined for the holiday-shortened week after Friday’s news about the emergence of a new, potentially more contagious, coronavirus variant in South Africa triggered a sharp sell-off in riskier assets such as equities. Treasury yields decreased on Friday amid the flight to assets viewed as safe-havens. Value stocks held up better than growth companies despite Friday’s selling pressure on stocks related to leisure and travel. Refer to major indexes’ weekly performance tables below.

Key highlights for the week/coming week:

1.    Biden renominates Powell as Fed chair. Powell was widely viewed as less dovish than another candidate Lael Brainard. FOMC meeting minutes from Nov showed that some policymakers advocated for a quicker taper. 

2.    Oil market shrugs off release from reserve. Oil prices actually rose on the news before it plunged 13% on Friday on fears that the new variant will damage demand for oil.

SPX sectors in play

10 out of the SPX 11 sectors closed in red for the week, the only sector closed in positive is Energy(XLE). Travel-related stocks dropped as Asia and Europe reinstated some restrictions, though stay-at-home and some vaccine oriented stocks gained ground. For the week, Consumer Discretionary(XLY) and Communication Services(XLC) were the worst performers. Enrgy(XLE) and Consumer Staples( XLP) holding relatively well. Refer to below sector indexes weekly performance table.

Technically, all three major indexes' uptrend was well intact, DJI index closed down for 3rd week, while both SPX and Nasdaq retreated after hitting intra-week record high.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

For the week, the Shanghai Composite Index (SSE weekly chart) ending flat amid U.S.-China tensions and rising economic pressures that raised expectations for supportive government measures. Premier Li Keqiang said that China should step up efforts to stabilize employment, financing, and other key areas and that the government was studying policies on tax and fee cuts, along with some reforms, to support businesses.

Relations with the U.S. remained tense over the status of Taiwan and trade issues. The U.S. Commerce Department issued a trade blacklist naming a dozen Chinese companies that it said supported the military modernization of the People’s Liberation Army. Reports that China’s tech watchdog has asked the management of China’s ride-hailing app Didi Global to delist the company from the New York Stock Exchange due to data security concerns also underscored the depth of mistrust between both countries.

Hang Kong(.HSI weekly chart) stocks tumbled 3.9%, was the worst major index performer for this week. Alibaba’s dual listing counter in HK closed at its lowest.

Singapore

For the year-to-date(YTD), STI has been one of the best Asia performing index with 11.3% YTD return, well above other major regional indexes, refer to the above major indexes weekly performance table. STI index(STI weeklychart) retraced back to close just at its 50dma this week, which is a major support level. Next major support level would be 200dma at 3133 should be drop further. 

Stocks Mixed as Nasdaq Hits Record High

 Weekly Wrap Content for the week of Nov 19:

1. Week 46 major indexes performance;

2. Week 46 US sector indexes performance;

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

U.S

For the week ended Nov 19, the major indexes ended mixed as investors weighed strong economic and profits data against inflation fears, ongoing supply strains, and a rise in coronavirus infections in some regions. Growth stocks handily outpaced value stocks, helping lift the Nasdaq Composite to another record intraday high on Friday. Market activity was generally subdued as the Thanksgiving holiday week approached. Refer to major indexes’ weekly performance tables below.

Key highlights for the week/coming week:

1.    Retail sales jumped 1.7% in October, the biggest gain since March, while September’s increase was revised higher. Signs that the economic expansion was regaining momentum. 

2.    The House narrowly passed President Biden's $1.75 trillion social spending bill, sending it to the Senate. 

3.    Investors await Fed chair announcement-in particular, whether President Joe Biden would reappoint current Chair Jerome Powell or instead promote Fed Governor Lael Brainard, who is widely viewed as among the most “dovish” of Fed officials. 

Sectors in play

SPX 11 sectors performance for the week, Consumer Discretionary(XLY) and Technolgoy(XLK) outperformed, led by solid gain in Amazon shares and rebound in Tesla, while strength in Apple supported technology shares. Energy(XLE) stocks dropped alongside oil prices after China and the U.S. discussed releasing strategic reserves and U.S. inventories rose for the first time in five weeks. Financials(XLF) also weak. 

Technically, all three major indexes uptrend was well intact, DJI index closed down 2^nd week, while SPX and Nasdaq holding well, Nasdaq hit fresh new high.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

For the week, the Shanghai Composite Index (SSE weekly chart) edged up 0.6%. Disappointing earnings and revenue from e-commerce giant Alibaba Group Holding for the September quarter topped off a week that saw more negative headlines on the economy amid a scramble from real estate firms to raise funds.

Data released at the start of the week showed that economic momentum stayed weak in October as the real estate downturn weighed on industry. Prices for new and resold homes fell amid deeper contractions in construction starts and investment by developers.

Hang Kong(.HSI weekly chart) stocks tumbled 1.1%, dragged down by disappointing result from Alibaba.

Singapore

STI index(STI weekly chart) closed flat in a very quiet trading week. With a 0.8 per cent trading range, it was the STI's second narrowest weekly range in the past five years, according to SGX.  

Stocks Down on Inflation Concerns

Weekly Wrap Content for the week of Nov 12:

1. Week 45 major indexes performance;

2. Week 45 US sector indexes performance;

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

U.S

For the week ended Nov 12, the major indexes retreated from record highs, as investors confronted data showing the highest inflation in three decades. On Tuesday, the S&P 500 Index registered its first decline in nine sessions, ending its longest winning streak since 2017. The major indexes fell mid of week following news that the consumer price index (CPI) jumped 0.9% in October, well above consensus expectations of around 0.6%. The increase brought the year-over-year CPI increase to 6.2%, the highest since December 1990. Refer to major indexes’ weekly performance tables below.

Key highlights for the week/coming week:

1.    The headline CPI reading came in at 6.2% year-over-year, the highest level since 1990, while the PPI reading was 8.6%, the highest on record since 2010. 

2.    This week’s notable IPO of electric vehicle maker Rivian—the largest for a U.S. company since Facebook’s in 2012.

Sectors in play and what are the stocks to benefit in inflationary environments.

Historically, one of the best hedges to inflationary pressure is to invest in equities, which tend to outpace the rate of inflation over time. Consider this year, for example: While inflation is up 6.2% year-over-year, the S&P 500 is up 24.7%. Value and cyclical sectors like financials, energy and industrials tend to outperform.

SPX 11 sectors performance for the week, the small materials sector(XLB) performed best, seemingly helped by the recent passage of the Biden administration’s USD 1.2 trillion infrastructure bill in the House of Representatives. Consumer discretionary(XLY) shares led the declines in the S&P 500 following a steep fall in Tesla, after CEO Elon Musk announced plans to sell some of his shares. Energy(XLE) shares were also especially week as oil prices backed away from recent peaks. Refer to below SPX sector ETF’s weekly performance table.

Technically, all three major indexes hit fresh record highs, with very bullish uptrend.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

For the week, the Shanghai Composite Index (SSE weekly chart) added 1.4% which was the biggest weekly gain in two months, amid speculation that Beijing would announce easing measures to help indebted property companies as the specter of defaults continued to loom over the sector.

The previous week, cash-strapped developer China Evergrande Group averted a last-minute default for the third time in the past month. Property is a key pillar of China’s economy, and worries have grown that the sector’s financial woes could spill into other sectors.

Hang Kong(.HSI weekly chart) stocks climbed 1.8%, the most in three weeks, rebounded after its two-week losing streak.  

Singapore

STI index(STI weekly chart) closed retreated after hitting new intra-week high since Jan 2020, Singapore local banks led the rally and expected to continue outperform in the inflationary environments. 

Stocks Post Fresh Records Following Upbeat Labor Report

Weekly Wrap Content for the week of Nov 5:

1. Week 44 major indexes performance;

2. Week 44 US sector indexes performance;

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

U.S

For the week ended Nov 5, the major indexes finished higher, posting a fifth-straight week of gains, while notching fresh record highs in the process. The moves came following an upbeat October labor report that showed a larger-than-expected increase in jobs created and a decline in the unemployment rate. Refer to major indexes’ weekly performance and monthly performance tables below.

Key highlights for the week/coming week:

1.    Fed November 2-3 meeting. Will begin to wind down(“taper”) its monthly pace of bond purchases, currently at $120 billion, by $15 billion per month. At this pace, the Fed will phase out the purchases entirely by next June. However, last week's message from the Fed calmed some nerves, as Chair Powell reiterated the view that inflation pressures are expected to be transitory (though with less certainty) and that the Fed will be patient on rate hikes. 

2.    Data shows the last Fed tapering in 2013 had little impact on equity markets. While volatility increased as former Chair Bernanke hinted at a step-down in asset purchases, equities performed well during the 10 months of tapering. The S&P 500 rose 9.5%, with the health care, real estate and utilities sectors leading the market gains. 

3.    Nonfarm payroll data released on Friday shows the U.S. economy added 531,000 jobs in October, the most since July and the first upside surprise in three months. 

4.    Expected favorable seasonality could help to add to this year’s tally. Historical data of SPX monthly performance since 1989 shows the two-month stretch between November and December has been rewarding for investors, with above-average equity-market gains and the highest chances of positive returns, at 78% and 81% chances of positive returns, with average gains at 2.1% and 1.6% respectively.

For the week, Technology stocks and small-caps were particularly strong, and growth shares outperformed value stocks. Oil prices dropped from their recent highs after Biden administration officials mentioned the possibility of releasing supply from the strategic petroleum reserve, hurting energy sector stocks. Among 11 SPX sectors,  Consumer discretionary(XLY) and Technolgy(XLK) shares fared best, Financials(XLF) and Healthcare(XLV) lagged. Refer to below SPX sector ETF’s weekly performance table.

Technically, all three major indexes hit fresh record highs, with very bullish uptrend.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

For the week, the Shanghai Composite Index (SSE weekly chart) retreated 1.6% as headlines about the beleaguered property sector and a growing COVID-19 outbreak across the country dampened sentiment. Renewed restrictions in many places raised worries about supply chain constraints dampening the country’s growth outlook as infections spiked near a three-month high.

China’s property sector is grappling with a deepening liquidity crisis reflected in a wave of offshore debt defaults, credit rating downgrades, and selling in the stocks and bonds of major developers. Seven of the top 10 China-listed developers by revenue recorded steep declines in profitability in the July-to-September quarter, which has increased pressure on Beijing to support the stressed sector. Kaisa Group Holdings became the latest developer in China’s USD 5 trillion property sector to reveal that it was having debt problems.

On the economic front, China’s official manufacturing Purchasing Managers’ Index fell to a worse-than-expected 49.2 in October from 49.6 in September, below the 50-point mark separating growth from contraction. October marked the second month that factory activity contracted and was the latest sign that the economy was losing steam after a strong recovery from the pandemic.

Hang Kong(.HSI weekly chart) stocks closed with 2^nd weekly loss, and was the worst performing index for the week.

Singapore

STI index(STI weekly chart) closed at a new high since Jan 2020, renewed its strong upward move after the previous week’s pause. Singapore local banks led the rally and are expected to continue to outperform in anticipating rising rates.