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.