Stocks Continue Good Start to 2023

Weekly Wrap Content for the week of Jan 13:

1. Week 2 major indexes performance;

2. Week 2 US sector indexes performance;

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

U.S.

For the week ended Jan 13, 2023, major U.S indexes recorded a second consecutive week of gains as investors weighed key inflation data and quarterly earnings reporting season kicked off in earnest on Friday. The Nasdaq Composite and growth-oriented sectors outperformed, helped by rebounds in some mega-cap technology-related names, including Amazon.com, Tesla, and Microsoft. Latest CPI data released on Thursday which under investors’ spotlight, decelerated further for 3^rd consecutive month, eased inflation sets the stage for the Fed to slow down the pace of rate hikes further.

U.S markets will be closed for a public holiday on Monday 16 Jan. Refer to major indexes’ weekly performance tables below.

Key highlights for the year and outlook:       

1.    December inflation data on Thursday fell as per consensus expectation. Dec CPI marking the smallest annual increase since Oct 2021. Annually, CPI was up 6.5%, decelerating from November's 7.1% pace. Market probabilities for a quarter-point (0.25%) hike when Fed meets on 1 Feb jumped to 97% after the CPI reading. 

2.    Jobs remains healthy. The weekly jobless claims fell to a three-month low of 205k, while the University of Michigan’s preliminary reading of consumer sentiment jumped much more than expected and reached its highest level since April.

SPX sectors in play

Eight out of 11 sectors within the SPX index closed positive for the week. The Nasdaq Composite and growth-oriented sectors outperformed, helped by rebounds in some mega-cap technology-related names, including Amazon.com, Tesla, and Microsoft. Consumer Discretionary(XLY) and Technology(XLK) sectors outperformed and  Consumer staples(XLP) shares lagged. Financials(XLF) stocks such JPMorgan Chase, Wells Fargo, and Bank of America beat consensus expectations when they released earnings Friday morning, but cautious outlooks from the banking giants caused shares to fall in early trading. Refer to below SPX sector indexes weekly performance table.  

Indexes technical levels

Technically, the three major indexes closed up 2^nd week in a row in 2023. DJI was the strongest one, rebounded near to its latest three-month high, technical bullish. SPX closed 2^nd week up in a row, approaching its major downtrend line drawn from Jan 2022, the Nasdaq index still some more room to its major downtrend line. Click to view below the three major indexes’ weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China and HK stocks rose as a softer-than-expected U.S. inflation print and optimism about the post-pandemic reopening outlook boosted sentiment. The Shanghai Composite Index gained 1.19% and the blue chip CSI 300 Index advanced 2.35%, a four-month high. The Hang Seng Index added 3.56%, reached six-month high.

SSE weekly chart

.HSI weekly chart

Hopes that domestic demand will recover in the coming months rose after Beijing abandoned its zero-COVID policy in December and officials stepped up measures to support the struggling property sector. Economists polled by Reuters projected a swift rebound for China’s economy once infections peak and forecast 4.9% growth this year versus an estimated growth pace of about 3% in 2022.

On the trade front, China’s exports fell 9.9% in December from a year ago as global demand softened and rising infections disrupted activity after the government rolled back pandemic restrictions.

Technically, the Hang Seng Index closed 4^th week consecutive up, has formed a “V-shap” rebound on its weekly chart, though still plenty of room to upside, it fell more than 50% in Feb-Oct 2022 period. Both the SSE and .HSI indexes closed above their respective major moving averages 20, 50 and 200d, which are bullish signs.

Singapore

STI index had spiked above its EIGHT weeks sideway consolidation trading range between 3314-3222 area on Monday but fell back and traded within the range throughout the week. While the index is trading above all major moving averages (20,50, and 200MAs), it’s expected market will move higher from here.

STI weekly chart

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