Weekly Wrap Content for the week of Apr 8:
1. Week
14 major indexes performance;
2.
Week 14 US sector indexes performance;
3.
Major indexes weekly charts of support and resistance levels;
U.S
For the
week ended Apr 8, major indexes finished lower for
the week, with small-caps and growth stocks lagging considerably. Volumes were
sparse for much of the week, as investors awaited the start of first-quarter
earnings reporting season. Twitter
shares jumped over 27.0% on Monday, however, following news that Elon Musk had
acquired a 9.2% stake in the social media firm. Fed minutes confirm an
aggressive tightening plan ahead and the situation in Ukraine continued to loom
large over sentiment. Refer to major indexes’ weekly performance tables below.
Key highlights
for the week/outlook:
1. Interest rate hikes. Fed’s minutes from the mid-March policy meeting revealed that policymakers were prepared to reduce the central bank’s balance sheet by USD 95 billion per month, more than the consensus expectation of around USD 80 billion. The minutes also showed that officials were prepared to raise rates by 50 basis points (0.50%) at their upcoming May meeting. By the end of week, futures markets were predicting that the most likely scenario was for the federal funds target range to hit 2.50% to 2.75% by the end of the year—well above its current range of 0.25% to 0.50%.
2. Weekly jobless claims fell much more than expected to 166k, hit lowest level since 1968. Arguably suggested that the economy was proving resilient in the face of inflation and the war in Ukraine.
SPX
sectors in play
Five out
of 11 SPX sectors closed positive this week. The typically defensive consumer
staples(XLP) and health care(XLV) sectors recording solid gains, while
information technology(XLK), communication services(XLC), and consumer
discretionary(XLY) shares registered steep losses. Refer to below sector
indexes weekly performance table.
Technically, all the three
indexes closed under water but DJI index appeared more resilient while the
technology dominant Nasdaq dropped the most. DJI and SPX indexes are still
above their 20/50 moving averages, while Nasdaq went under both Mas.
China/HK
China markets down for
the week, as a coronavirus lockdown in Shanghai and expectations for aggressive
monetary tightening by the U.S. Federal Reserve curbed risk appetite. The
broad, capitalization-weighted Shanghai Composite Index declined 0.94%, and the blue chip CSI 300 Index, which tracks the largest
listed companies in Shanghai and Shenzhen, fell 1.08%.
Shanghai has been
under a citywide, two-stage lockdown that began on March 28 in an effort to
stop the virus’s spread. With 23 Chinese cities currently under total or
partial lockdown, Nomura has estimated that 193 million people are affected in
areas that account for 13.5% of China’s economy.
In economic news, the
Caixin Services Purchasing Managers’ Index, a private survey focused on smaller
businesses, sank to 42 in March from 50.2 in February, its lowest level since
the pandemic started, reflecting the latest outbreak’s toll on consumer demand.
In response to recent weak economic data, expectations are mounting that the
People’s Bank of China will reduce the reserve requirement ratio in near term.
Hang Seng index closed lower this week after rebounded previous week as the
spectre of extended lockdown in Shanghai unnerves market with hit to earnings,
economy. China’s market regulators proposed revising confidentiality rules
involving offshore listings, a move that could end the country’s long-running
dispute with the U.S. over audit inspections for dual-listed companies. This is
a great relief especially for China tech giants such as Alibaba, JD.com, Baidu
etc.
Singapore
STI index was down 1.05% after its four-week consecutive up. As shared in my
previous weekly post, the index appears losing steam and risk in profit-taking facing
key resistance level 3466(year-high), though STI weekly uptrend very well intact,
for now.
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