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.