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.