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.