Stocks Ended Higher Led by Large Cap Growth stocks

Weekly Wrap Content for the week of Mar 24:

1. Week 12 major indexes performance;

2. Week 12 US sector indexes performance;

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

U.S.

For the week ended 24 Mar, 2023, major U.S indexes ended slightly higher after a choppy week roiled by shifting concerns over the banking system, the Fed interest rate plans, and the health of broader economy. Investors are also digesting the potential effects of the Fed's enactment Wednesday of another quarter-point interest rate increase, as the central bank confronts challenges from the banking turmoil and still-high inflation. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Banking turmoil. Credit Suisse has been acquired by UBS, providing some stability to a systemically important bank in Switzerland, and U.S. deposit outflows have stabilized more recently – there still is ongoing uncertainty in the system. 

2.    Rates hikes may be nearing to end. As expected, the Federal Reserve raised rates by 0.25% in its March meeting, but now seems closer to the end of its rate-hiking cycle. The FOMC maintained its outlook for a peak fed funds rate of 5.1%, implying that perhaps one more rate hike of 0.25% may be ahead of us. Markets currently forecast no further rate hikes, and they expect the Fed to start cutting rates as early as the July meeting. 

3.    The week’s economic data arguably suggested that the economy still had significant steam heading into the banking turmoil, at least. Weekly jobless claims remained near five-decade lows, and S&P Global’s Composite Index of both current services and manufacturing activity, released Friday, jumped from 50.1 to 53.3 (with readings of 50 and over indicating expansion), indicating the fastest pace of private sector growth since last May, with new orders turning higher for the first time since September.

SPX sectors in play

Nine out of 11 sectors within the SPX index closed positive for the week. Banking industry and recession worries weighed on value stocks and small-caps, while large-cap growth stocks benefited from falling interest rates. The technology-heavy Nasdaq Composite outperformed including Communication Services(XLC) and Technology(XLK) stock, financials(XLF) underperformed for a third consecutive week, and the small real estate sector(XLRE) suffered from worries about how stresses in the regional banking system would affect the commercial real market, where regional banks are the primary lenders. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three indexes closed positive for the week, with large cap growth stock dominated Nasdaq outperformed. Technically, SPX are stuck between its 50 and 200dma, while Nasdaq closed above all major moving averages i.e 20, 50 and 200dma. The Dow index on the the other hand, closed below all its major MAs, and YTD returns still under water. Refer to below indexes weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks rose on hopes that the country’s central bank will maintain an accommodative stance amid the global banking turmoil. The Shanghai Stock Exchange Index gained 0.46% and the blue chip CSI 300 added 1.72%. In Hong Kong, the benchmark Hang Seng Index(.HSI) added 2.03%.

Key highlights for the week and outlook for China/HK:

1.    The People’s Bank of China (PBOC) left its benchmark one-year and five-year loan prime rates (LPR) at 3.65% and 4.3%, respectively, for the seventh consecutive month. 

2. China’s economic indicators have picked up in recent months as consumption and infrastructure investment rebounded from pandemic lockdowns.

Technically, Hang Seng Index (. HSI) rebounded for 2^nd week in a row as money managers reload their funds. The .HSI index closed just above its 20 and 200dma which is a bullish sign. While SSE index edged up slightly this week while still in sideway consolidation within its past eight weeks’ trading range.

SSE weekly chart

.HSI weekly chart

Singapore

The STI index closed up slightly for 2^nd week but YTD return still under water( refer to the above index weekly performance table).

Technically, STI index almost at its 200dma at 3214 level. Appears stuck in between with no clear direction in coming week. Immediate downside support at around its 50% Fibonacci 3190 level and upside resistance at around 3250 level.

STI weekly chart

Source: Some contents and data excerpted from various public market reports.

Stocks Mixed Amid Turmoil in Banking Sector

Weekly Wrap Content for the week of Mar 17:

1. Week 11 major indexes performance;

2. Week 11 US sector indexes performance;

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

U.S.

For the week ended Mar 17, 2023, major U.S indexes closed mixed for the week. Pressures on the banking sector were front and center, with headlines taking markets on a roller-coaster ride. Concerns emerged after the failures of Silicon Valley Bank (SVB) and Signature Bank, which then spread to First Republic Bank and Credit Suisse.

This one-two punch involving U.S. regional banks and a large international bank briefly erased the S&P 500’s gains for the year. Worries that a steeper slowdown in the economy would follow, and hopes that the Federal Reserve would now be forced to moderate or even pause in its rate-hiking cycle. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Worries persist around the banking system. After Sillicon Valley Bank(SVB)’s failure. The Fed, the Federal Deposit Insurance Corporation (FDIC), and the Treasury Department announced that all SVB depositors would have full access to funds, while the Fed made additional funding available to banks to safeguard deposits and prepared to address any potential liquidity pressures.

Investors wonder if First Republic will be next. News on Wednesday that European banking giant Credit Suisse (CS) was also experiencing problems sent markets sharply lower again, latest news from Financial Times on Sunday said UBS offers to buy Credit Suisse for up to $1bn. 

2.    Rates expected to be ended lower. By the end of the week, futures markets were pricing in zero likelihood of a 50-basis-point hike compared with a 40% chance of one the week before, according to CME Group data. Markets were also placing a roughly 39% chance on the Fed keeping rates steady at its upcoming meeting on March 21–22 and a nearly 99% probability that the federal funds target rate would end the year lower than its current range of 4.50% to 4.75%. 

3.    CPI in Feb reported in line with expectation to 6.0% yoy, its slowest pace since Sep 2021, it was overshadowed by the turmoil in the banking sector. The CPI and recent jobs data would call for more hikes, but the stress in the banking sector calls for a potential pause.

SPX sectors in play

Seven out of 11 sectors within the SPX index closed positive for the week. Financials(XLF) and Communication Services(XLC) stocks recording strong gains, while financials(XLF) and energy(XLE) shares suffered significant losses. The mega-cap tech shares that generate significant free cash flow and have minimal exposure to the regional banks performed especially well, and large-cap growth stocks outperformed their value counterparts. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Dow which dominated mostly by value stocks closed down for 2^nd week, lost 0.15% for the week, while Nasdaq and SPX each gained 4.41% and 1.43% respectively (refer to the above indexes weekly performance table). SPX and Dow both still below their major moving averages (20, 50 and 200dma) while Nasdaq rebounded above all three MAs. Technical evidence to show growth outperforming value stocks. Refer to below indexes weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks ended a volatile week on a mixed note as global banking woes offset optimism about an economic recovery and further monetary support from Beijing. The Shanghai Stock Exchange Index(SSE) added 0.63%, and the blue-chip CSI 300 Index fell 0.21% in local currency terms. In Hong Kong, the benchmark Hang Seng Index(.HSI) added 1.03%.

Key highlights for the week and outlook for China/HK:

1.    The People’s Bank of China (PBOC) said it will cut the reserve requirement ratio (RRR) for most banks by 25 basis points for the first time this year in a bid to ensure liquidity and boost the economy. The moves follow PBOC Governor Yi Gang’s surprise reappointment for another term after he was widely expected to retire. 

2.    China new home prices rise at fastest pace in years. New home prices in 70 of China's largest cities rose 0.3% in February, above the 0.1% gain in January and marking the fastest increase since July 2021, according to the National Bureau of Statistics. 

3.    New bank loans reached a higher-than-expected RMB 1.81 trillion in February compared with January’s record RMB 4.9 trillion.

Technically, Hang Seng Index (. HSI) closed just below all its major moving averages (20, 50 and 200MAs) which shows market still weak. While SSE index closed just above 50dma and well above 200dma. The index has been in sideway consolidation mode for more than seven weeks.

SSE weekly chart

.HSI weekly chart

Singapore

The STI index closed up 5.85points or 0.18% to 3183.28 for the week, its first weekly gain after six weeks of consecutive down.

Technically, STI got a spike down and tested 3100 support level on Tuesday (14 Mar) before rebounding and recovered all its losses earlier in the week. STI closed below all its major moving averages 20, 50 and 200DMAs now, momentum turns sour a bit, immediate upside resistance at 3200-3211 gap area, also just beneath its 200dma level of 3215, a quite strong resistance level to watch in coming week(s). Immediate downside support at recent low around 3100 level.

STI weekly chart

Source: Some contents and data excerpted from various public market reports.

Inflation and Rate Hikes Erase Nearly All of 2023’s Gains

Weekly Wrap Content for the week of Mar 10:

1. Week 10 major indexes performance;

2. Week 10 US sector indexes performance;

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

U.S.

For the week ended Mar 10, 2023, major U.S indexes pulled back sharply, as investors absorbed more tough talk from Federal Reserve Chair Jerome Powell and signs that he and his fellow policymakers still had work to do in cooling inflation and the hot labor market. The S&P 500 Index fell on Friday to its lowest intraday level since January 5, that has left the index slightly in positive territory for the year. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Higher than expected rates to be hiked. Fed Chair Powell on Tuesday testified before Congress that policymakers were prepared to speed up the pace of tightening and raise rates higher than anticipated if inflation maintains its current trajectory. He noted that the process of getting inflation down to the Fed’s long-term 2% target will likely be bumpy, referring to a broad reversal of the disinflationary trend in January, while adding that stronger recent economic data suggest the ultimate level of interest rates may be higher than expected. Markets ratcheted up expectations for the peak fed funds rate, shifting to an expected range closer to 5.5%-5.75%. 

2.    Jobs growth remains strong. Friday’s closely watched non-farm payrolls showed an increase of 311k nonfarm jobs in Feb, well above consensus expectations of around 200k. The unemployment rate rose unexpectedly, however, from a January five-decade low of 3.4% to 3.6%. 

3.    A bank failure. SVB Financial, or Silicon Valley Bank(SVB) was shut down following losses in its asset portfolio and an inability to access necessary funding to maintain adequate capital -- marking the second-biggest bank failure in U.S. history, according to The Wall Street Journal. Concerns grew and spread quickly to other financials throughout the week, financials sector led the declines within the S&P 500.

SPX sectors in play

All 11 sectors within the SPX index closed in red for the week. Financials(XLF) led the declines and contributed to the pronounced weakness in value stocks. Small-caps underperformed large-caps, while value stocks fell more than their growth counterparts, pushing the Russell 1000 Value Index into negative territory for the year-to-date period. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three indexes closed below all major moving averages i.e 20/50/100/200dma, selling may have been accelerated by the index going below both its 100-day and 200-day moving averages—metrics followed by technical traders. Refer to below indexes weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks retreated as signs of weakening demand and a lower-than-expected 2023 growth target unveiled by Beijing tempered concerns about the country’s outlook. The Shanghai Stock Exchange Index(SSE) declined 2.95%, the worst weekly loss in more than two months, and the blue chip CSI 300 fell 3.96%. In Hong Kong, the benchmark Hang Seng Index(.HSI index) plummeted 6.07%, its biggest weekly loss in over four months.

Key highlights for the week and outlook for China/HK:

1.    China’s GDP target 2023 lower than expected. Beijing set an economic growth target of around 5% this year at the National People Congress (NPC), China’s parliament, which started Sunday, March 5, and ends Monday, March 13. The target lagged most forecasts but represents a recovery from 3% growth last year, when coronavirus lockdowns, an ailing property sector, and weakening export demand led to China’s lowest economic growth in decades. 

2.    Feb CPI Surprise to the downside.  China reported that its consumer price index rose 1% in February from a year earlier, trailing forecasts, down from a 2.1% rise the previous month. Core inflation rose 0.6% in February from 1% in January, while producer prices also fell more than expected due to lower commodity costs. The latest data affirmed that China’s inflation remains muted, unlike in the U.S. and Europe, and raised expectations that the central bank would maintain its supportive policy stance.

Technically, Hang Seng Index(.HSI) dropped 6.07% this week, its biggest weekly loss in over four months. And SSE index was down 2.95%, biggest loss in over two months.

SSE weekly chart

.HSI weekly chart

Singapore

STI index declined six weeks in a row, trading below all its major moving averages, and it faded the previous gap support between 3180-3211 area. The recent pull back has given back more than half of its gains from Oct 21 bottom to Jan 30 peak. Immediate technical support at around 3240-its 61.8% Fibonacci level.

STI weekly chart

Source: Some contents and data excerpted from various public market reports.

Stocks Rebounded After Three Weeks Decline

Weekly Wrap Content for the week of Mar 3:

1. Week 9 major indexes performance;

2. Week 9 US sector indexes performance;

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

U.S.

For the week ended Mar 3, 2023, major U.S indexes closed higher and regained some ground following their worst weekly decline in two months. Heavy economic calendar offers mixed signals, sentiment also appeared to gain support from the S&P 500 Index staying above its 200-day moving average, a metric commonly followed by technical analysts and traders. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Manufacturing PMI ticked higher in Feb for the first time since May, although it remained in contraction territory at 47.7. The services PMI fell slightly but less than consensus expectations and still indicated moderate expansion (55.1). 

2.    Market expected rate hikes might pause in summer. Given ongoing inflationary pressures, market expectations for Fed rate hikes have notably increased since the start of the year. Market forecasts now call for three additional rate hikes in 2023 (in the March, May and June FOMC meetings), which would bring the fed funds rate to around 5.5%. Historically the Fed tends not to pause rate hikes until it is at or above the rate of inflation.

SPX sectors in play

Nine out of 11 sectors within the SPX index closed positive for the week. Energy(XLE) and materials(XLB) shares were especially strong, while communication services(XLC) were helped by a gain in Facebook parent Meta Platforms. Utilities stocks(XLU) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Among the major indexes, SPX rebounded after fell to testing its 200dma earlier in the week, regained lost ground and managed to close above all major Mas i.e 50/200 and 250dma, which is a bullish sign. Nasdaq Composite Index also rebounded after three weeks’ decline, Dow index recovered most of it previous week’s loss this week. Refer to below indexes weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Chinese stocks rose for the second week ahead of the National People’s Congress (NPC) meeting as strong economic data raised prospects for a better-than-expected recovery. The Shanghai Stock Exchange Index(SSE) increased 1.87%, and the blue chip CSI 300 gained 1.71% in local currency terms. In Hong Kong, the benchmark Hang Seng Index advanced after four weeks of losses and added 2.79%.

Key highlights for the week and outlook for China/HK:

1.    The meeting of the NPC, China’s parliament, starts Sunday, March 5, and is expected to last about one week. The meeting happens every five years and is closely watched for signs about economic policy shifts and any senior leadership changes. 

2.    China’s official manufacturing PMI data rose to 52.6 in February from January’s 50.1, marking the highest reading since April 2012 as domestic activity picked up. The nonmanufacturing PMI rose to 56.3 from 54.4 the previous month.

Technically, Hang Seng Index(.HSI) rebounded 1^st week after four weeks’ decline. Closed well above 20,000 mark. The SSE index also advanced for 2^nd week in a row, closed at its highest since Jul 2022, both indexes appear bullish with more room to upside as expected.

SSE weekly chart

.HSI weekly chart

Singapore

STI index fell to 5^th week in a row, pulled back to around its 250dma level at 3236. The recent pull back in STI index has been led by local trio banks, which started pullback by profit-taking after earnings results around mid-last month. The trio banks totally account 46.86% weight of the index.

Technically, STI fell more than 5% from its 30 Jan peak at 3408.19, given back all its gains this year and closed at its 250dma (yearly line) for the week, which is also its previous sideway consolidation base area. Immediate technical support at 3216(200dma)-3236(250dma) area, any break lower could lead to next support at around 3180 level.

STI weekly chart

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