April Ends on High Note Helped by Upbeat Earnings Reports

 Weekly Wrap Content for the week of Apr 28:

1. Week 17 major indexes performance;

2. Week 17 US sector indexes performance;

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

U.S.

For the week ended 28 Apr, 2023, major U.S indexes end the month on a high note helped by a string of strong earnings reports. SPX, Dow and tech-focused Nasdaq all notching their second-straight day of gains on Friday. 35% of SPX companies, which together represent 44% of its market capitalization, were scheduled to release results during the week. On Thursday, gains in just four stocks—Microsoft, Apple, Amazon.com, and Facebook parent Meta Platforms—accounted for nearly half of the S&P 500’s strong gain (the biggest since January 6), after Meta jumped 14% on an earnings beat. Refer to major indexes’ weekly and YTD performance table below.

Markets have logged a healthy rally so far this year, including the following year-to-date: The S&P 500 is up 8%. The Nasdaq has seen the strongest momentum, up 16%, as technology and growth stocks have rallied on the back of lower rates. Refer to below table for major indexes performance in April.

Sell in May and Go Away?

The old market adage "sell in May and go away" may have a ring to it, but is it actually valid advice? Unsurprisingly, the answer is no.

Over the last 40 years, the average return for the stock market from May to August was a respectable 3.2%, hardly a period worth missing. The market was higher in 75% of those summer periods, with the best May through August gains coming in 1987 (+16%), 2009 (+18%) and 2020 (+21%). The worst periods were in 1998 (-14%), 2002 (-14%) and 2010 (-11%).

Key highlights for the week and outlook:

1.    Q1 GDP report confirmed that the U.S economy is losing momentum, with GDP slowing to 1.1% in the first quarter, compared with 2.6% in the prior quarter and 3.2% in the quarter before that. Although the GDP report signals the economy is softening, consumers continue to show resiliency, with household spending (the lion's share of the economy) increasing at a healthy 3.7% rate last quarter, a notable acceleration from the previous period and well above the average of 1.7% over the prior four quarters. 

2.    Inflation date, the personal-consumption expenditures (PCE) price index—the Fed's preferred inflation gauge—slowed to 4.2% in March from a year earlier. That's slower than the previous month's 5.1% gain, but still more than double the Fed's 2% target. 

3.    Corporate earnings announcements were in the spotlight, with markets getting a boost from better-than-feared results. With roughly half of S&P 500 companies having reported quarterly results, earnings for the period are down 1.7%, while revenues are up 4% versus the same quarter a year ago. 

4.    Renewed banking stresses heightened fears of a slowdown and possible recession. First Republic Bank’s earnings release revealed that the bank had suffered more than USD 100 billion in deposit outflows in the first quarter. First Republic’s stock fell further on Friday after CNBC reported that the Federal Deposit Insurance Corporation was planning on taking the bank into receivership that evening.  

SPX sectors in play

Six out of 11 sectors within the SPX index closed positive for the week. Mega-caps outperformed cyclicals and small-caps, led by Communication Services(XLC) and Technology(XLK) stocks, while Industrials(XLI) and Utilities(XLU) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three indexes closed up for the week. DJI closed at best level since Jan 9, SPX and Nasdaq both closed at their respective best level since last Aug. All three indexes appear technical bullish. Refer to below indexes weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks mixed ahead of a five-day holiday as Beijing reaffirmed its supportive policy stance, assuaging concerns about an uneven economic recovery. The Shanghai Stock Exchange Index rose 0.67% while the blue chip CSI 300 fell 0.09%. In Hong Kong, the benchmark Hang Seng Index(.HSI) lost 0.9%. China’s stock markets are closed Monday through Wednesday for the Labor Day holiday and will resume trading on Thursday, May 4.

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

1.    China’s Politburo, the country’s top decision-making body, vowed to continue its “forceful” fiscal and monetary policy stance to support the economy as it faces obstacles in economic transformation and insufficient domestic demand, state media reported following a meeting of top officials. 

2.    The People’s Bank of China extended its short-term cash injections into the banking system via seven-day reverse repurchase agreements for the 11th straight day on Friday, marking the longest streak this year. The net total injection reached RMB 637 billion for the current cycle as the central bank attempted to ensure ample liquidity at month-end.

Technically, Hang Seng Index (. HSI) fell 2^nd week in a row, stuck between 50dma and 200dma, expected sideway consolidation short term with downside support at 200dma level around 19400. While SSE index rebounded this week and recovered most of its previous loss. SSE index crossed above 20 and 50dma this week which is bullish.

SSE weekly chart

.HSI weekly chart

Singapore

The STI index fell for 1^st week after six weeks up streak, closed between 20 and 50dma. The index has retreated down to its four-week bottom at around 3270 level. Immediate downside support to watch would be at its 50dma around 3258 and upside resistance around 3330.

STI weekly chart

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

U.S stocks Down for the Week as Recession Concerns Linger

Weekly Wrap Content for the week of Apr 21:

1. Week 16 major indexes performance;

2. Week 16 US sector indexes performance;

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

U.S.

For the week ended 21 Apr, 2023, major U.S indexes ended lower as investors juggled recession and banking sector concerns against expectations for the remainder of the first-quarter earnings season. Stronger-than-expected manufacturing data reported Friday belied some of the weaker economic numbers reported earlier in the week, contributing to a generally indecisive trading session. Coming week a little over a third of the S&P 500 companies are reporting earnings, which will include many of the big tech heavyweights, such as Amazon, Alphabet, Meta and Microsoft. Refer to major indexes’ weekly and YTD performance table below.

Key highlights for the week and outlook:

1.    The Cboe Volatility Index (VIX), Wall Street’s so-called fear gauge, fell to its lowest level of 16.77 since late 2021. Despite the long list of investor worries that includes recession, inflation, debt-ceiling and geopolitical concerns, equity-market volatility has remained low. 

2.    Investors expect the Fed to have one final rate hike in May, then pause after rate reaches 5%-5.25% for the remainder of the year. 

3.    Cooling labor market. Thursday’s weekly jobless claims report brought signs of growing weakness in the labor market. 

4.    Manufacturing gauge unexpectedly strong. Flash PMI for March report on Friday was 53.5, topping expectations for a number closer to 52 and an 11-month high. The strong data seemed to suggest the economy is holding up better than some fear.

SPX sectors in play

Six out of 11 sectors within the SPX index closed positive for the week. Consumer Discretionary(XLY) and Consumer Staples(XLP) led gainers, while energy companies(XLE) continued to slump in the wake of this week's sell-off in crude oil prices. Communication Services(XLC) lagged too. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three indexes closed down 0.1% to 0.42% for the week. DJI and SPX both recorded 1^st weekly down after five weeks gain streak, while Nasdaq still trapped within its four-week consolidation range. All three indexes still trading above their major moving averages which are bullish. Refer to below indexes weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks fell as mixed economic data and news that the U.S. may introduce fresh investment curbs against China weighed on sentiment. “Investor sentiment edged down as debate over the sustainability of fundamental recovery continues despite the strong macro data,” said Morgan Stanley analysts, suggesting investors to watch May Golden Week data. The Shanghai Stock Exchange Index declined 1.11% while the blue chip CSI 300 fell 1.45%. In Hong Kong, the benchmark Hang Seng Index(.HSI) lost 1.78%.

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

1.    China’s GDP expanded a better-than-expected 4.5% in the first quarter of 2023 from a year earlier, compared with last year’s growth pace of 3.0%. The data prompted several banks to raise their annual growth forecasts for China as consumption continues to recover. 

2.    Home prices rise at fastest pace in almost two years. China’s new home prices increased for a third consecutive month, rising 0.5% in March after February’s 0.3% gain and marking the fastest increase since June 2021, according to the National Bureau of Statistics. The sector has shown signs of stabilizing this year, bolstered by a government rescue package last November.

Technically, Hang Seng Index (. HSI) fell and close just below its 20 and 50dma but still above 200dma, which suggesting limit downside and expected sideway consolidation short term. While SSE index slumped on Friday, logging the biggest daily decline since last November’s rally driven by optimism over easing of COVID restrictions, as uneven Chinese economic recovery dented investor sentiment. SSE index retreated down to just above its 50dma, uptrend still intact by now.

SSE weekly chart

.HSI weekly chart

Singapore

The STI index surprisingly edged higher and closed positive for 6^th week in a row, against major peers in the above index weekly performance table.

Technically, STI index appears in a zig-zag sideway consolidation for the whole week, no clear direction. Major upside resistance at around previous peak 3408 level, downside support at around recent low 3280 level.

STI weekly chart

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

Encouraging Inflation Reports Drive Gains

Weekly Wrap Content for the week of Apr 14:

1. Week 15 major indexes performance;

2. Week 15 US sector indexes performance;

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

U.S.

For the week ended 14 Apr, 2023, major U.S indexes ended the week higher, as investors weighed slowing growth signals against signs that inflation pressures were receding a bit more than expected. Volumes picked up but remained muted for much of the week, as investors waited for the unofficial start of quarterly earnings season on Friday. Refer to major indexes’ weekly and YTD performance table below.

Key highlights for the week and outlook:

1.    Inflation continues to moderate. Headline inflation has dropped to 5% in March. 1) March retail sales fell 1% versus February, provided evidence that the consumer is losing a bit of steam. 2) The labor market remains healthy, but is showing some emerging signs of softening. 

2.    Investors expect at least one further rate hike, and then move the sidelines in coming months, ending its aggressive rate hike cycle. Market expected one more quarter-point hike in May, to bring Fed rate to around 5% mark then pause. 

3.    Q1 earning season unofficially started on Friday, kicked off by reports from banking giants JPMorgan Chase, Wells Fargo, and Citigroup. All three topped consensus estimates.

SPX sectors in play

Seven out of 11 sectors within the SPX index closed positive for the week. Financials(XLK) and Energy(XLE) stocks outperformed, while Technology(XLK) shares lagged, weighed down in part by a decline in graphics and artificial intelligence chipmaker NVIDIA, which continued a recent retreat from a 52-week high. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three indexes closed positive for the week. DJI and SPX both have had five weeks up in a row, while Nasdaq still trapped within its three-week consolidation range. U.S stocks appear technically bullish. Refer to below indexes weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks were mixed after a volatile week as softer-than-expected inflation dampened investor sentiment. While new loans and trade data surprised to the upside, it was not enough to offset broader concerns about the strength of the economic recovery. The Shanghai Stock Exchange Index gained 0.32% while the blue chip CSI 300 fell 0.76%. In Hong Kong, the benchmark Hang Seng Index(.HSI) gained 0.53%.

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

1.    Inflation eased for the second straight month in March. China’s consumer price index rose 0.7% in March from a year earlier, down from a 1% rise the previous month. The producer price index slid 2.5%, the lowest since June 2020 and its sixth straight monthly decline, according to Reuters. 

2.    New bank loans totaled RMB 3.89 trillion in March, more than double February’s RMB 1.81 trillion, according to PBOC data, reflecting higher credit demand after Beijing’s unwinding of COVID restrictions led to a pickup in economic activity. 

3.    China’s exports unexpectedly rose 14.8% in March from a year ago, surprising analysts who had forecast a decline and marking the first increase since September. Imports fell a less-than-expected 1.4%.

Technically, Hang Seng Index (. HSI) edged higher, closed just above 50dma which is bullish, it’s now above all major MAs including 20/50 and 200dmas. While SSE index closed at its best level on Friday since last Jul, after sideline consolidation for most of the week. Technical indicators appears bullish.

SSE weekly chart

.HSI weekly chart

Singapore

The STI index edged higher and closed positive for 5^th week in a row.

Technically, STI index appears in sideway consolidation most of the time for the week. Major upside resistance at around previous peak 3407 level, major downside support at around 50dma 3266 level.

STI weekly chart

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

U.S Economy Shows Signs of Slowing

Weekly Wrap Content for the week of Apr 7:

1. Week 14 major indexes performance;

2. Week 14 US sector indexes performance;

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

U.S.

For the week ended 7 Apr, 2023, major U.S indexes were mostly lower over a holiday-shortened week. U.S. markets were shuttered on Friday, along with most of the other markets, in observance of the Good Friday holiday. As we head into the second quarter of 2023, the strength in the market this year so far has been notable. The SPX is up nearly 7%, and the technology-dominant Nasdaq is up handsomely over 15%. Refer to major indexes’ weekly and YTD performance table below.

Key highlights for the week and outlook:

1.    Weak economic data. The closely watched U.S Mar nonfarm payroll reported on Friday below forecast but investors were unable to react with markets closed for a public holiday. Both manufacturing and service PMI data reported in the week also came in well below expectations. The manufacturing PMI fell to a near three-year low to 46.3, below expectation of 47.5. Service index came in at 51.2, below expectations of 54.4, although still slightly in expansion territory. 

2.    Labour market is showing signs of faltering. U.S labour market has been a source of strength in the economy. However, last week’s ADP private-payrolls report for March showed an increase of 145k jobs, well below the expected 250k increase. 

3.    Market expected a mild recession perhaps starting in mid-2023 in the U.S economy, with evidence of recent set of economic data.

SPX sectors in play

Five out of 11 sectors within the SPX index closed positive for the week. Healthcare(XLV) stocks outperformed, while Technology(XLK) and Consumer Discretionary(XLY) stocks lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three indexes closed above their major moving averages i.e. 20/50 and 200dma. U.S stocks appear technically bullish. Refer to below indexes weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks advanced in a holiday-shortened week as a recovery in services activity and the property sector bolstered investor sentiment. The Shanghai Stock Exchange Index gained 1.22% and the blue chip CSI 300 rose 1.13%. In Hong Kong, the benchmark Hang Seng Index(.HSI) slipped 0.34%. Markets in Hong Kong and China were closed on Wednesday in observance of the Qingming festival, also known as Tomb Sweeping Day.

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

1.    Mixed economic data. The private Caixin/S&P Global survey of services activity rose to 57.8 in March, up from February’s 55.0, the third consecutive monthly expansion after Beijing lifted pandemic restrictions in December. However, the survey’s manufacturing gauge slowed to 50.0 in March from an eight-month high in February amid tepid global demand. 

2.    Property sector shows signs of recovery. China's new home sales rose 55.7% in March, up from 31.9% in February, according to a private survey of 14 cities, Reuters reported. China Evergrande Group, once the country’s largest real estate developer and the highest-profile casualty of the liquidity crisis hitting the property sector, signed a deal with creditors to restructure most of its outstanding debt.

Technically, Hang Seng Index (. HSI) stalled this week, after consecutive three weeks of advances. The benchmark closed just below its 50dma and well above 20 and 200dma. While SSE index has had six weeks’ advance in a row, closed back to near its nine-month high this week, stays above all major moving averages which is bullish.

SSE weekly chart

.HSI weekly chart

Singapore

The STI index closed up with 4^th weekly gain with YTD return rebounded to 1.51%( refer to the above index weekly performance table).

Technically, STI index crossed above all its major moving averages this week, has recovered more than two thirds of its loss from the selloff between Jan peak 3408.19 to Mar bottom 3094.28 level since rebounded three weeks ago. Major upside resistance at around previous peak 3407 level, major downside support at around 50dma 3275 level.

STI weekly chart

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

Stocks Wrapped up a Volatile but Positive Q1

Weekly Wrap Content for the week of Mar 31:

1. Week 13 major indexes performance;

2. Week 13 US sector indexes performance;

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

U.S.

For the week ended 31 Mar, 2023, major U.S indexes posted solid gains in a relatively quiet week for economic data releases and financial news. The week also brought the end of the first quarter of 2023. The technology-heavy Nasdaq Composite jumped more than 16% for the quarter, while the broad market S&P 500 Index rose approximately 7%. However, the narrowly focused large-cap Dow Jones Industrial Average was only modestly higher. Refer to major indexes’ weekly and monthly performance tables below.

Key highlights for the week and outlook:

1.    Banking stocks outperform. Bank stocks, which have declined sharply since Silicon Valley Bank (SVB) and Signature Bank collapsed earlier in March, advanced, with the widely followed KBW Bank Index easily outpacing the broad market’s gains. On Thursday, the Biden administration released a set of proposed new regulations for mid-size banks, or those with assets between USD 100 billion and USD 250 billion. 

2.    Fed inflation target still way to go. U.S. core (excluding food and energy) personal consumption expenditure (PCE) price index for February coming in at 4.6% versus consensus expectations for 4.7%, which is a positive sign on inflation. The core PCE is the Federal Reserve’s preferred measure of inflation. While the February 2023 reading was below the recent high of 5.4% reached in February 2022, it is still well in excess of the Fed’s 2% long-term inflation target. 

3.    Real estate Investment Trusts(REITs) risk an area of potential concern. Recent stress in regional banks would lead to tightening in leading conditions as banks focus on building liquidity, which are likely to tighten financing of all commercial real estate loans. Bonds that issued by riskier office REITs also remained under significant pressure.

SPX sectors in play

All 11 sectors within the SPX index closed positive for the week. Small-caps outperformed large-caps, and value stocks advanced modestly more than growth stocks. Rising oil prices boosted energy stocks, which make up a significant part of value indexes. U.S. benchmark West Texas Intermediate(WTI) crude oil rose more than 9% for the week, climbing back above the USD 70 per barrel level. Energy(XLE) and Consumer Discretionary(XLY) stocks outperformed.  Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three indexes closed above their major moving averages i.e. 20/50 and 200dma with the SPX and COMP appear most bullish. Refer to below indexes weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks advanced as strong economic data coupled with supportive comments from Beijing boosted confidence in the country’s growth outlook. The Shanghai Stock Exchange Index gained 0.22% and the blue chip CSI 300 added 0.59%. In Hong Kong, the benchmark Hang Seng Index(.HSI) added 2.43%.

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

1.    Premier Li Qiang, who became the country’s No. 2 official earlier this month, reinforced China’s commitment to open its economy and deliver reforms that can stimulate consumption and international business. 

2.    International Monetary Fund (IMF) Managing Director Kristalina Georgieva forecast that China’s rebound would account for approximately one-third of global growth this year amid increased risks to economic stability following banking sector turmoil. The IMF projected that China’s economy would grow 5.2% this year, while global growth would slow to below 3.0%. Last year, China’s GDP grew 3.0%, one of its lowest levels on record. 

3.    Chinese e-commerce giant Alibaba Group announced a plan to break itself up into six units that can independently raise capital or even seek initial public offerings. Many analysts believe that the company’s overhaul may appease regulators and could mark the end of China’s yearslong crackdown on private enterprise.

Technically, Hang Seng Index (. HSI) rebounded for 3^rd consecutive week, closed just below its 50dma and well above 20 and 200dma. While SSE index edged up slightly 3^rd week in a row as well but still in sideway consolidation within its past eight weeks’ trading range.

SSE weekly chart

.HSI weekly chart

Singapore

The STI index closed up with 3^rd weekly gain with YTD return rebounded just above water( refer to the above index weekly performance table).

Technically, STI index hit 50dma on Friday and ended the week just below it. It has recovered more than half of its loss from the selloff between Jan peak 3408.19 to Mar bottom 3094.28 level since rebounded two weeks ago. Immediate upside resistance at around 50dma 3277 level, major downside support at around 200dma 3215 level.

STI weekly chart

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