Stocks end Mixed in Light Holiday Trading

Weekly Wrap Content for the week of Dec 23:

1. Week 51 major indexes performance;

2. Week 51 US sector indexes performance;

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

U.S.

For the week of Dec 23, the U.S major indexes were mixed in a week of generally quiet holiday season trading. The Dow Jones Industrial Average Index(DJI) recorded modest gains, SPX closed flat while the Nasdaq Composite(COMP) dropped nearly 2% despite recording its best daily gain since November on Wednesday. Hawkish comments from the Federal Reserve and other global central banks over the previous week continued to be a key factor weighing on markets. Some of the week’s economic signals may also have intensified fears of future rate hikes. U.S financial markets closed on Monday Dec 26 for the Christmas holiday. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:      

1.    U.S. Q3 GDP revised up. Government data released Thursday that the U.S economic growth in the third quarter was upped from 2.9% to 3.2%, boosted by upward revision of personal consumption. The U.S. economy contracted in the first half of the year with GDP declining in the first and second quarters, stoking worries of recession. The week's upward revision to third quarter GDP suggests that economic activity rebounded nicely in the second half of the year.

2.    Jobless claims surprised modestly on the downside, and continuing claims recorded their first weekly drop since Oct, which show a still resilient job market. 

3.   Yield rise, dollar index down. The US dollar dropped to its six-month low, U.S treasury rates climbed through most of the week, partly in response to actions by Japan’s central bank. Traders cited the Bank of Japan’s (BoJ) surprise decision to widen the allowed band around 10-year Japanese government bond (JGB) yields as a driver of higher U.S. rates and a steeper Treasury curve. 

SPX sectors in play

Six out of 11 sectors within the SPX index closed positive for the week. Energy stocks(XLE) outperformed as U.S. oil inventories came in well below consensus expectations. Consumer discretionary(XLY) shares performed worst, dragged lower by a steep decline in Tesla(TSLA) following the electric vehicle maker’s announcement of increased price discounts. Semiconductor(XLK) stocks also sold off on Thursday after chipmaker Micron Technology reported falling global demand. Refer to below SPX sector indexes weekly performance table. 

Indexes technical levels

Technically, the three major indexes closed mixed for the week. While DJI index rebounded after two consecutive weeks down, both Nasdaq and SPX indexes recorded their 3^rd weekly drop in a row. Nasdaq pulled back closer to its Oct/Nov low(support) level around 10300, SPX still trapped within its previous monthly price range. Click to view below the three major indexes’ weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stocks fell as a spike in coronavirus cases weighed on the country’s growth outlook. The Shanghai Composite Index was down 3.85% and the blue chip CSI 300 Index declined 3.19%. In Hong Kong, the Hang Seng Index added 0.7%.

SSE weekly chart

.HSI weekly chart

The World Bank cut its China economic growth forecasts for this year and next due to the pandemic and the country’s ongoing property market slump. The bank projected that China’s economy would grow 2.7% this year and 4.3% in 2023, down from its September forecasts of 2.8% growth this year and 4.5% in 2023.

China’s government stepped up calls to bolster the economy in 2023 following the prior week’s Central Economic Work Conference, an annual meeting in which officials discuss policy goals for the coming year.

The People’s Bank of China issued a statement confirming that it would support a recovery in consumption and guide financial institutions to back property sector mergers and acquisitions.

Technically, SSE index slumped to its six-week low for the week, closed below major moving averages 20/50 and 200dma which is bearish. While .HSI index edged higher and was consolidating around its 200dma level, appears bullish.

Singapore

STI index edged 0.52% up this week. Technically, the STI index still consolidating within its six weeks tight trading range between 3314-3322 area, while trading above all major moving averages (20,50, and 200MAs) which is bullish bias. 

STI weekly chart

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