Santa Claus Rally? Not Seen Yet This Year

Weekly Wrap Content for the week of Dec 17:

1. Week 50 major indexes performance;

2. Week 50 US sector indexes performance;

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

U.S

Two weeks left to wrap up the year of 2021, Santa Claus, where are you?

For the week of Dec 17, all three major equity indexes fell, as the prospect of central bank tightening and fears over the impact of the omicron variant of the coronavirus sparked considerable volatility. As longer-term interest rate expectations increased, growth stocks and the technology-heavy Nasdaq Composite Index fared the worst. Refer to major indexes’ weekly and monthly performance tables below.

Key highlights for the week/coming week:

1.    FOMC meeting in the week as all eyes were on, it announced as expected that it will wind down bond purchases at a faster rate, which are now expected to stop by the end of March. 

2.    Interest rates hikes expected to three quarter-point hikes in 2022 instead of two. This is a slightly more hawkish and expected to increase market volatility next year. 

3.    Fed Chair Jerome Powell optimistic about growth ahead. Gauges of current economic activity released on Thursday came in modestly below expectations but still indicated robust expansion, while housing market indicators surprised to the upside. 

4.    Omicron fears appeared to grow later in the week. Stocks sold off on Friday morning, but the declines may have been cushioned by growing evidence that omicron, while much more contagious, causes less severe symptoms than prior variants.

SPX sectors in play

Among the 11 SPX major sectors, Energy(XLE), technology(XLK), and consumer discretionary(XLY) shares performed worst, while the typically defensive utilities(XLU), health care(XLV), and consumer staples(XLP) sectors managed gains.  Refer to below sector indexes weekly performance table.

Technically, all three major indexes uptrend was well intact.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

For the week, the Shanghai Composite Index (SSE weekly chart) fell 0.93%, amid the resurgence in global COVID-19 cases and U.S.-China tensions after Washington placed investment and export restrictions on dozens of Chinese companies for their role in allegedly repressing China’s Muslim minorities and in supporting Beijing’s military.

Early in the week, Beijing pledged economic stability in 2022 at the government’s annual Central Economic Work Conference, which analysts viewed China’s policy statements as dovish overall.

Hang Kong(.HSI weekly chart) Hang Seng Index fell to finish at its lowest close in more than 18 months, as Sino-U.S. tensions weighed on investor sentiment already hit by concerns about the Omicron coronavirus variant, inflation and policy tightening. The .HSI index just dipped below its key technical support level 23200 for the week.

Singapore

STI index(STI weekly chart) closed lower for the week but trading within its three-week sideway range. More or less same as previous week, there is no clear direction for STI in coming week, unless it has broken its sideway range.