Stocks End a Weak September

Weekly Wrap Content for the week of Sep 29:

1. Week 39 major indexes performance;

2. Week 39 US sector indexes performance;

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

U.S.

For the week of 29 Sep, U.S three major indexes were lower. The S&P 500 Index suffered a fourth consecutive weekly pullback, as upward pressure on rates appeared to weigh on investor sentiment. Higher oil prices contributed to concerns that inflation could prove more difficult for central banks to tame, spurring a sell-off in bonds. As the week wore on, the increasing likelihood of a U.S. government shutdown may also have weighed on investor sentiment. The yield on the benchmark 10-year U.S. Treasury note peaked above 4.6% on Wednesday. Refer to major indexes’ weekly performance table below.

September was a lousy month, with the S&P 500 falling nearly 5%. Rising rates and concerns that tighter Fed policy will undercut the economy drove additional weakness in growth and small-cap investments, with the Nasdaq and Russell 2000 indexes both shedding close to 6% for the month. This capped off an overall 3% drop for the S&P 500 for the third quarter, the first quarterly loss in a year.

Key highlights for the week and outlook:

1.    Inflation check. The latest inflation report on Friday (the core personal consumption expenditure price index [core PCE] – the Fed's preferred measure of inflation) which showed the first drop below 4% in more than two years. PCE index for Aug increased 3.9% from year-ago levels—the lowest annual inflation rate in about two years but above the central bank’s 2% target. 

2.    Government shutdown will occur if Congress fails to pass legislation to authorize government spending for the new fiscal year beginning on October 1. With the funding deadline looming and little progress being made so far on a broader budget bill, it’s expected Congress will also pursue a short-term stopgap measure, called a continuing resolution, which would fund the government and avoid a shutdown while negotiations continue. 

3.    Interest rate. The 10-year Treasury yield jumped above 4.6% at one point in the week, its highest since 2007. After a decade and a half of ultra-low interest rates, this has come with some discomfort. Rising rates have weighed on stock returns, but peaks in 10-year yields have been a catalyst for stock-market rallies. 

4.    Q4 Outlook. While Q4 returns have been higher following third-quarter declines, the fourth quarter is traditionally a solid period for stocks, with an overall average quarterly increase of 5% going back to 1990. 

SPX sectors in play

Three out of the 11 sectors of the SPX index closed positive for the week. Within the index, utilities(XLU) lost the most ground. Energy(XLE) stocks, on the other hand, outperformed. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The three major indexes mixed for the week. The SPX dropped for a fourth-consecutive week and lost 4.9% for the month(refer to the above monthly performance table). All three indexes declined for 2^nd consecutive month. SPX major technical support at around 4200 level-its 200dma. Click below three indexes for their weekly charts respectively in a new window.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

 

China/HK

China stocks fell in a holiday-shortened week as a lack of positive news on the economy dampened investor sentiment. The blue chip CSI 300 Index and Shanghai Composite Index both fell for the week ended Thursday. Stock markets in mainland China were closed Friday, the start of a 10-day holiday for the Mid-Autumn Festival and National Day, and will reopen Monday, October 9.  The Shanghai Stock Exchange Index(SSE) lost 0.7% while the blue chip CSI 300 fell 1.32%. In Hong Kong, the benchmark Hang Seng Index(.HSI) declined 1.37%. (Refer to the above weekly performance table).  

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

1.    Latest official data released on Sat (Sep 30) shows China's factory activity expanded for the first time in six months in September, adding to a run of indicators suggesting the world's second-largest economy has begun to bottom out. China Sept manufacturing PMI 50.2 vs 49.7 in Aug; non-manufacturing PMI 51.7 vs 51.0 in Aug.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index rebounded 0.39% for the week after previous week’s loss, the index has been in five weeks consolidation in the range of 3290-3189. There were 14 out of 30 stocks recorded positive weekly return in the STI index. Top gainer was HKland with 3.48% and worst performer was Venture with 5.43% loss.

STI weekly chart

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

The Fed: Higher for longer and fewer rate cuts in 2024

Weekly Wrap Content for the week of Sep 22:

1. Week 38 major indexes performance;

2. Week 38 US sector indexes performance;

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

U.S.

For the week of 22 Sep, U.S three major indexes declined as investors reacted to hawkish forecasts from the Federal Reserve’s latest meeting and rising U.S. Treasury yields. The S&P 500 Index recorded its largest one-day loss in six months on Thursday on its way to a third-straight losing week. Refer to major indexes’ weekly performance table below.

Key highlights for the week and outlook:

1.   Fed’s September meeting in the week: to keep rates elevated until inflation moves more convincingly toward 2.0%. The Fed held rates steady at 5.25% - 5.5% at this meeting but kept the option of an additional rate hike on the table, maintaining its outlook for a peak fed funds rate of 5.6%. The Fed's new set of projections also reduced the number of potential rate cuts in 2024, from 1.0% to 0.5% of cuts next year – implying that the elevated interest-rate environment may last longer than expected. 

2.    Treasury yields reacted to the somewhat hawkish fed outlook, moved sharply higher, as both the 2-year (which is more sensitive to moves in the fed funds rate) and 10-year yields moved to highs of this cycle, putting downward pressure on stock and bond returns. 

3.    Impact of the United Auto Workers’ (UAW) strike and the potential for a U.S government shutdown may have also weighted on markets. 

4.    Markets react swiftly: Yields move higher, and stocks move lower, particularly in the large-cap technology space and among the "Magnificent 7" (Magnificent 7 stocks include AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA). Investor enthusiasm around artificial intelligence (AI) initially drove these stocks higher, but valuations now seem more stretched, and they face the challenge of a higher-rate environment.

SPX sectors in play

All the 11 sectors of the SPX index closed in the red for the week. Consumer Discretionary(XLY) and Financials(XLF) sectors were at the bottom of the table. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All three major indexes declined for the week. DJI closed at two-month low, Nasdaq at more than one-month low and the SPX dropped to more than three-month low. Click below three indexes for their weekly charts respectively in a new window.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks rose as investors grew more optimistic about the country’s economic outlook. The Shanghai Stock Exchange Index(SSE) gained 0.47% while the blue chip CSI 300 added 0.81%. In Hong Kong, the benchmark Hang Seng Index(.HSI) declined 0.69%. (Refer to the above weekly performance table).  

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

1.    No major indicators were released in China during the week. However, official data for August released the prior week provided evidence of economic stabilization in the country. 

2.    On Thursday, China's cabinet, the State Council, pledged to accelerate measures to consolidate the country’s recovery and continue supporting growth in 2024, state media reported. 

3.    In a sign of investors’ concern about the health of China’s economy, China recorded capital outflows of USD 49 billion in August, the largest since December 2015, which pushed the yuan to a 16-year low against the U.S. dollar, according to Bloomberg.

Technically, SSE Index closed marginally higher for 2^nd consecutive week, just above 3090 technical support level. The index appears has been in five-week sideway consolidation range. Hang Seng index declined for third consecutive weekly loss, marginally, also within its five-week trading week. Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index recorded its largest loss in five weeks, gave back all its previous week’s gain and ended at around 3200 technical support level. Five index stocks recorded positive return for the week: DFI +3.45%; Emperador +1.96%; JMH +1.01%; ST Engineering 1.25% and YZJ Ship +2.38%.  

STI weekly chart

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

Stocks Mixed Ahead of Fed Meeting

Weekly Wrap Content for the week of Sep 15:

1. Week 37 major indexes performance;

2. Week 37 US sector indexes performance;

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

U.S.

For the week of 15 Sep, U.S three major indexes closed mixed, as DJI closed marginally higher while Nasdaq and SPX indexes closed lower for a second -straight week- as investors readied for the FOMC meeting next week 19^th -20^th Sep.

Key takeaways:

·      U.S. benchmark West Texas Intermediate(WTI) oil prices rose above $90 per barrel for the first time since November 2022.

·      Mixed reviews of new Apple products iPhone 15 weigh on Tech.

·      The Federal Open Market Committee (FOMC), is widely expected to conclude its policy meeting Wednesday by its leaving benchmark rate unchanged.

Refer to major indexes’ weekly performance table below.

Key highlights for the week and outlook:

1.    Pace of disinflation slows as headline and core CPI move in mixed directions. Headline CPI for August moved higher, but core CPI fell further. The headline CPI rose 0.6% for the month of August, and was up 3.7% from a year ago, an acceleration from July's 3.2% pace. On the other hand, core CPI, which excludes food and energy, moved lower, from 4.7% to 4.3%, but the 0.3% monthly rise was slightly more than expected. 

2.    Rising oil prices. After averaging $75 for most of the year, WTI crude oil prices reached a 10-month high this week of about $90 a barrel, but they are still well below last year's $123 peak. The main driver behind the recent surge has been production cuts from Saudi Arabia (the top oil exporter) and Russia, as both countries announced earlier this month that they will maintain the current lowered production through the end of the year. Sluggish growth in China, which is the biggest oil consumer, and a slowdown in European activity could prevent a more significant rise past the $100 mark. 

3.    Fed officials have indicated that they want to slow down the pace of rate hikes. This is why they will likely look through the higher energy costs for now and keep rates steady at coming week's meeting. Bond markets are pricing in little chance of a Fed rate hike next week, and about a 30% chance of one last hike in November, followed by one percentage point of rate cuts by the end of 2024. Rates are likely near their peak for this cycle.

SPX sectors in play

Seven out of the 11 sectors of the SPX index closed higher for the week. Value stocks leading the market as WTI oil prices rose above $90 per barrel for the first time since November 2022. Large-cap shares outperformed small-caps. Consumer Discretionary(XLY) and Financials(XLF) sectors outperformed. Tech(XLK) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All three major indexes’ weekly uptrend still intact. DJI support level around 34300 level, SPX support level around 4366 level, Nasdaq support around 13400 level. Click below three indexes for their weekly charts respectively in a new window.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks were mixed after official indicators revealed that the country’s economy may have bottomed, although data also pointed to ongoing weakness in the property market. The Shanghai Stock Exchange Index(SSE) ended the week broadly flat(+0.03%) while the blue chip CSI 300 gave up 0.83%. In Hong Kong, the benchmark Hang Seng Index(.HSI) shed 0.11%. (Refer to the above weekly performance table). 

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

1.    Official data for August provided evidence of economic stabilization in the country. Industrial production and retail sales grew more than forecast last month from a year earlier, while unemployment unexpectedly fell from July. 

2.    Inflation data revealed that consumer prices returned to growth after slipping into contraction in July. The consumer price index rose 0.1% in August from a year earlier, up from July’s 0.3% decline. 

3.    The People’s Bank of China (PBOC) cut its reserve ratio requirement(RRR) by 25 basis points for most banks for the second time this year to inject more liquidity into the financial system.

Technically, SSE Index closed flattish below all its major MAs sentiment still weak but appears in sideway consolidation. Hang Seng index rose by the most in about two weeks on Friday after China’s central bank cut bank’s RRR, but it still closed marginally lower for second week in a row. Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index rallied 2.27% for the week, led by the trio banks. DBS, OCBC and UOB gained 3.04%, 3.78% and 3.25% respectively for the whole week. STI's YTD returns positive now. 

Technically, STI index resumed its rebound after a pause previous week, upside major resistance level at around 3370 its recent high area. The index currently trading above all its major averages which is a bullish sign.

STI weekly chart

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

Good News for Economy Bad News for Stocks

Weekly Wrap Content for the week of Sep 8:

1. Week 36 major indexes performance;

2. Week 36 US sector indexes performance;

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

U.S.

For the week of 8 Sep, stocks closed lower over the holiday shortened week as some positive economic signals drove an increase in interest rates. A decline in Apple, the most heavily weighted stock in the S&P 500 Index, drove part of the declines after news that Chinese government employees would no longer be able to use iPhones. Investors also may have been discouraged by reports that the upcoming iPhone 15 will be significantly more expensive than current models. Declines in NVIDIA and other chipmakers also weighed on the indexes.  Refer to major indexes’ weekly and monthly performance table below.

Key highlights for the week and outlook:

1.    Still resilient economy. ISM services PMI for Aug jumped unexpectedly to its highest level since Feb. Meanwhile, Jobless claims as reported on Thursday fall to lowest level since February, the number of Americans applying for unemployment in the previous week fell to 216k, the lowest level in six month. Continuing claims fell to 1.68mil, the lowest level since mid-July. 

2.  Complicating inflation concerns as crude oil price rises to highest since Nov 2022.

SPX sectors in play

Two out of the 11 sectors of the SPX index closed up for the week. Energy(XLE) and Utilities(XLU) outperformed. Growth stocks continue outperformed value shares. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All three major indexes closed lower and gave back most of previous week’s gains. Weekly uptrend still intact for all. DJI support level around 34300 level, SPX support level around 4366 level, Nasdaq support around 13400 level. Click below three indexes for their weekly charts respectively in a new window.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks retreated as the latest economic indicators reinforced concerns about the country’s weakening outlook.  The Shanghai Stock Exchange Index(SSE) fell 0.53%. While the blue chip CSI 300 gave up 1.36%. In Hong Kong, the benchmark Hang Seng Index(.HSI) declined 0.98% for the week ended Thursday after financial markets were closed Friday due to a heavy rainstorm that flooded the city. (Refer to the above weekly performance table).  

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

1.    Services activity grows at slowest pace since December. The private Caixin/S&P Global survey of services activity fell to a below-forecast 51.8 in August from July’s 54.1. The official manufacturing PMI remained in contraction for the fifth consecutive month but came in slightly above expectations. 

2.    China’s exports fell 8.8% in August from a year earlier, softening from the sharp 14.5% drop in July. Imports shrank by 7.3%. Both readings were above expectations. 

3.    China’s renminbi currency fell to a record low of 7.36 against the U.S. dollar in overseas trading after the central bank set its yuan fixing rate at a two-month low. The exchange rate fell below the psychologically important level of 7.35 and close to the weakest since the inception of the offshore market in 2010. 

4.    China’s property stocks rallied after government pushed supportive measures including relaxing requirements for mortgage downpayments and interest rates.

Technically, Both .HSI and SSE Index still facing downside pressure as it’s trading below all major moving averages i.e 20/50/200 MAs. Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index retreated after two0-week rebound, gave back most of its previous weekly gain.

Technically, STI index is trading at around “middle land” after recent rebound, showing some resilience amid stepped-up uncertainty over rising oil prices, China's economy, and the potential for additional interest rate hikes from the Federal Reserve. It appears a bit weak as the STI index currently closed below major Moving averages 20,50 and 200dma. It would provide positive support to local market if the U.S stocks can stabilise or rebound. Major downside technical support for STI at 3030-3040.

STI weekly chart

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

Stocks Mostly Higher After Jobs Report

 Weekly Wrap Content for the week of Sep 1:

1. Week 35 major indexes performance;

2. Week 35 US sector indexes performance;

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

U.S.

For the week of 1 Sep, indexes closed solid higher as signs of a loosening job market make investors increasingly confident the Federal Reserve may soon be able to wrap up its historically aggressive interest rate-hiking campaign. A decrease in longer-term interest rates over much of the week provided a boost to growth shares in particular by reducing the implied discount on future earnings. Major indexes closed out their first negative month since February. Refer to major indexes’ weekly and monthly performance table below.

Major indexes weekly performance:

Major Indexes monthly performance for Aug:

Key highlights for the week and outlook:

1.    Some cooling in the labour market. Job openings unexpectedly fell by 338k in Jul and hit their lowest level since Mar 2002. Nonfarm payrolls report on Friday shows 187k jobs in August, above expected 170k but below this year’s average of 236k. Unemployment rate ticked higher to 3.8% from 3.5%, hits 17-month high. 

2.    ISM manufacturing PMI for Aug released on Friday was 47.6 still indicating a contraction in the sector-climbed unexpectedly to its best level since Feb. 

3.    Interest rate hikes, expectations grow that the Fed will remain on hold for the rest of the year. As labour market seems cooling down and inflation easing.

SPX sectors in play

Nine out of the 11 sectors of the SPX index gained for the week. Growth stocks continue outperformed value shares for second week. Technology(XLK), Energy(XLE) stocks outperformed. Utilities (XLU) and Consumer Staples(XLP) stocks lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Both Nasdaq(COMP) and S&P 500(SPX) indexes closed 2^nd weekly gains in a row. DJI also closed first weekly up after two-week down streak. The three indexes uptrend well intact. Click below three indexes for their weekly charts respectively in a new window.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks rose after the government issued a series of stimulus measures aimed at reviving the economy. The Shanghai Stock Exchange Index(SSE) advanced 2.26%. While the blue chip CSI 300 also gained 2.22%. In Hong Kong, the benchmark Hang Seng Index(.HSI) rose 2.37% for the week ended Thursday after financial markets were closed Friday due to the approach of a typhoon. (Refer to the above weekly performance table).  

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

1.    The previous Friday, China’s central bank cut the amount of foreign currency deposits that domestic banks must hold as reserves. The reduction in the foreign exchange reserve requirement ratio from 6.0% to 4.0% effectively freed up more foreign currency in the local market to buy the renminbi currency, which fell to its lowest level since 2007 against the U.S. dollar in August. 

2.    Country Garden Holdings, formerly China’s largest developer by sales, revealed in a filing that it might default on its debt if its financial performance continued to deteriorate. Meanwhile, China Evergrande Group, another major developer that is already in default, unveiled more losses and postponed credit meetings that were supposed to start this week. 

3.    Analysts believe that while China’s economy has struggled to rebound from pandemic restrictions lifted in late 2022, recent stresses in the property sector and shadow banking system do not pose an immediate systemic risk as the government pursues its so-called common prosperity agenda. However, with China recording quarter-on-quarter economic growth of just 0.8% as of June and recent trade activity coming off cyclical highs, they believe the country faces a period of below-trend growth.

Technically, Both .HSI and SSE Index still facing downside pressure as it’s trading below all major moving averages i.e 20/50/200 MAs. Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index closed 2^nd weekly up. The index is currently trading in the middle of its long-term range after two weeks’ rebound from its bottom of the range. For the index stocks, Wilmar and UOL led weekly gains with 6.48% and 4.08% respectively. Genting SP and YZJ Ship lagged with -3.31% and -1.74% respectively. Technical support to around 3200, immediate upside resistance 3265 level.

STI weekly chart

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