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.