Stocks Up After Giving Back Most Earlier Gains

Weekly Wrap Content for the week of Oct 7:

1. Week 40 major indexes performance;

2. Week 40 US sector indexes performance;

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

U.S

For the week ended Oct 7, the U.S stocks ended higher for the first time in four weeks but surrendered most of their gains, as some data suggested that the economy was not slowing enough to satisfy Federal Reserve policymakers. September nonfarm payroll report on Friday seemed to dampen recently increased optimism that the Fed could decelerate its aggressive monetary policy tightening campaign. Crude oil prices climbed following the decision from OPEC+ to cut oil production on Wednesday, and gold traded lower. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Sep PMI fell. The ISM gauge of manufacturing activity fell to 50.9 in September (levels under 50 indicate contraction), below consensus expectations and its lowest level since 2020. Further calming inflation fears, job openings fell to their lowest level in over a year. Bad news in economy is good news for stocks. 

2.    Inflation resurfaced on OPEC+ move. OPEC+ group announced a 2 million-barrel per day cut in target production. The benchmark price for a barrel of domestic oil rose by roughly USD 10 over the week, crossing the USD 90 mark for the first time since late August. 

3.    Inflation resurfaced on resilient labor market. Signs of labor market strength also seemed to deepen inflation fears. Nonfarm payroll on Friday revealed there were 263k jobs increase in September. Good news in economy is bad news for stocks.

SPX sectors in play

Seven out of 11 sectors in the S&P 500 ended green this week. Energy(XLE) was the standout performer in the S&P 500 Index as oil prices surged following a decision by major exporters to cut global production. XLE index rebounded 13.6% this week. Consumer Discretionary(XLY) lagged. Refer to below SPX sector indexes weekly performance table.  

Technically all three major indexes ended higher for the first time in four weeks. It appears market sentiment still very weak and bears are in dominant.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stock markets were shut for the National Day holiday from October 1 to October 7. The weeklong break followed a risk-off September for Chinese assets as foreign investors sold off Chinese stocks and bonds and pushed the offshore yuan to a record low against the U.S. dollar at month-end. The onshore yuan exchange rate ended September near levels not seen since the 2008 global financial crisis, according to Bloomberg.

Beijing has stepped up measures to support the country’s debt-laden property sector ahead of China’s Communist Party congress, which is slated to start October 16 and last about one week.

In Hong Kong, China property stocks rose on reports that mainland financial regulators instructed the largest state-owned banks to extend at least CNY 600 billion (USD 85 billion) of net financing to the embattled property sector in the coming months. Hang Seng index (.HSI weekly chart) rebounded 3% this week, recorded its first time in six weeks.

Singapore

STI index (STI weekly chart) rebounded 15.6pts or 0.5% this week, 1^st time in three weeks. Technically, continues to watch STI index next key support at around 3090 area which is the consolidation bottom between Jun-Jul, also confluence with its uptrend line starts from the low of Mar 2020 pandemic outbreak.

Source: Contents/Data including information from various public market reports