A Wrap On a Tough 2022

Weekly Wrap Content for the week of Dec 30:

1. Week 52 major indexes performance;

2. Week 52 US sector indexes performance;

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

U.S.

For the final week of 2022, the U.S equities closed out the year in the red, and all three major indexes registered solid losses on a yearly basis. The stock market posted its worst yearly decline since 2008. Trading remained subdued in the final days of the year as volumes continued to be on the lighter side. A highly publicized wave of flight cancellations pushed shares of Southwest Airlines sharply lower when trading opened Tuesday, but the airline recaptured some ground as the week progressed. Bond trading closed early on Friday, and both equity and bond markets were scheduled to be closed on Monday in observance of the New Year’s Day holiday. Refer to major indexes’ weekly performance tables below.

2022 is a year that many investors may want to forget, or at least put behind them. The S&P 500 was down modestly last week and ended the year down about 20%.

Key highlights for the year and outlook:       

1.    For equity and balanced investors, 2022 brought the steepest losses since 2008 great financial crisis. For bond investors, this was the worst year on record for the Barclay's U.S. Aggregate Bond Index since it began over 45 years ago in 1976, down about 15%. Both equities and bond performed badly, you had few places to hide in 2022. 

2.    Though there were limited places for investors to hide this year across equities and bonds. The energy sector perhaps was one exception. It had its best year on record, with the S&P energy sector(XLE) up over 57%( refer to below SPX sector performance). 

3.    Value stocks outperformed growth by the largest margin since 2001. Ove rthe past decade, growth outperformed value for most years, and especially through the pandemic period. This was due to low interest rates. As interest rates rose rapidly in 2022, fed rate now around 4.3% from about 0.5% previously, higher-valuation assets, including growth stocks were under great selling pressure, and investors moved towards more defensive value sectors. 

4.    Cheers to a brighter 2023. While 2022 has been a challenging year for investors, and we still facing headwinds in the forms of central-bank tightening and an economic slowdown ahead, it’s expected the bear market should conclude in 2023. Good news for investors is this: Throughout history, every bear market has 1) ended and 2) led to a bull market that is longer and stronger than the bear market that preceded it.

SPX sectors in play

Three out of 11 sectors within the SPX index closed positive for the week. Financials(XLF) and Energy stocks(XLE) outperformed, Consumer staples(XLP) and materials(XLB) shares fell the most. Refer to below SPX sector indexes weekly performance table.  

For the year 2022, Defensive sectors were relative outperformers in 2022. Aside from energy, the three top-performing S&P 500 sectors for the year were consumer staples, health care, and utilities. These are traditionally considered "recession proof" sectors that can hold up better during periods of economic slowdown.

Source: FactSet, S&P 500

This chart shows the energy sector outperforming this year while growth sectors like Tech have been notably laggards.

Indexes technical levels

Technically, the three major indexes down for the week modestly and down for the year. DJI index down 8.8% yoy, SPX down 19.4% and Nasdaq down 33.1%. Click to view below the three major indexes’ weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stocks rose as Beijing continued to ease coronavirus pandemic restrictions despite a surge in cases. The Shanghai Composite Index gained 1.4% and the blue chip CSI 300 Index added 1.13%, reversing several weeks of losses. In Hong Kong, the Hang Seng Index added 1%. For the whole year 2022, SSE was down 15.1% and Hang Seng Index(.HSI) was down 15.5%, performance about the same.

SSE weekly chart

.HSI weekly chart

Chinese officials scrap quarantine measures despite rising cases. The National Health Commission (NHC), China’s health regulator, downgraded the management of the coronavirus from the highest to second-highest level starting January 8, 2023.

Many countries have tightened entry requirements for travelers from China ahead of January’s reopening. The U.S., Japan, Taiwan, India, Malaysia, and Italy introduced COVID-19 testing on arrivals from China due to concerns about the severity of the virus and lack of transparency from the Chinese government regarding the spread.

Economic activity show signs of rebound. Economic activity picked up in several cities in China where coronavirus cases have shown signs of peaking. The number of passengers using subways in Beijing, Chongqing, Chengdu, and Wuhan rose by 40% to 100% as residents start to return to normal activities. Reports also showed an increase in traffic congestion, movie sales, and air travel in some areas.

Singapore

STI index edged lower 0.2% for the week but still closed 4.09% higher for the year 2022, a remarkable performance against other peers. STI index was the only market closed up among APAC peers, its total return (including dividend) was 8.29%, handsomely outperformed MSCI Asia Pacific Index which was -17.17%.

As Chinese newspaper Zaobao reported, here’s headline STI index stocks performance for the year 2022:

Top by market Cap: 1) DBS 87.8B; 2) OCBC 55.2B; 3) OCBC 51.9B 4) SingTel 42.3B; 5) Wilmar 26.7B

Top gainers by total return: 1) YZJ Ship +107.4%; 2) Sembcorp Ind +72.9%; 3)Keppel +49.3%; 4) Jardine C&C +44.6% 5) CDL +27.2%

Top loser by total return:1) SATS -27%; 2)Keppel DC-25.3%; 3)Frasers L&C -19%; 4) MapletreeInd -13.4% 5) MapletreeLog -12.5%

Technically, the STI index still consolidating within its seven 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