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.