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.