Stocks Fall, S&P Enters Correction Territory

Weekly Wrap Content for the week of Oct 27:

1. Week 43 major indexes performance;

2. Week 43 US sector indexes performance;

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

U.S.

For the week of 27 Oct, U.S three major indexes all declined by more than 2% and finished lower for a second straight week, as market sentiment was dented by mixed corporate earnings reports and concerns about higher interest rates—highlighted by the yield on the benchmark 10-year U.S. Treasury note briefly breaching the 5% level for the first time in 16 years. The S&P 500(SPX) entered correction territory Friday—having fallen more than 10% from its Jul peak. Refer to major indexes’ weekly performance table below.

Key highlights for the week and outlook:

1.   Tech giants announced mixed results. Nearly a third of the SPX index companies due to report their quarterly earnings. Market focused on Amazon, Google parent Alphabet, Facebook owner Meta Platforms, and Microsoft which are members of the so-called he “Magnificent Seven” namely the seven mega-cap technology-focused group. Although most metrics reported by the companies showed solid growth and exceeded consensus expectations, markets seemed to pounce on indications of rising expenses, which weighed on shares. 

2.    U.S Q3 GDP grew at a better-than-expected rate of 4.9%. It was the best showing since the end of 2021 and more than double the level seen in the second quarter. 

3.    Inflation in check, the core personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, provided mixed evidence on whether inflation is moderating. Core PCE increased to 0.3% in September from 0.1% in August, although the year-over-year measure ticked down to 3.7% in September from 3.8% previously. Although the latest data showed inflation remaining well above the Fed’s 2% long-term inflation goal, the central bank is widely expected to hold rates steady at its October 31-November 1 policy meeting. 

4.    Interest rate. After crossing the 5% threshold on Monday, the yield on the 10-year U.S. Treasury note trended lower and traded around 4.8% at the end of the week.

SPX sectors in play

All but one out of the 11 sectors of the SPX index closed lower for the week. The typical defensive Utility(XLU) sector added 1.21%, while Energy( XLE) and Communication Services(XLC) were among the worst performers. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The major three U.S stock indexes have been in a losing streak for three months already, recorded its largest monthly drawdown since beginning of 2020 covid outbreak, the SPX retreated more than 10% from its Jul peak into correction territory and hit its lowest point in five months. Nasdaq closed just below its 200dma while SPX and Dow away below it. Click below three indexes for their weekly charts respectively in a new window.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

 

China/HK

Equities in China rose as an improvement in industrial profits suggested that the economy may be stabilizing. The Shanghai Composite Index(SSE) advanced 1.16% while blue chip CSI 300 gained 1.48%. In Hong Kong, the benchmark Hang Seng Index added 1.32% in the holiday-shortened week. (Refer to the above weekly performance table).  

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

1.    Profits at industrial firms in China increased by 11.9% in September from the prior-year period, marking the second consecutive monthly increase, but slowed from the 17.2% rise in August. 

2.    China’s government authorized the issuance of RMB 1 trillion in additional sovereign debt for disaster relief and construction. It also approved a plan to raise the fiscal deficit ratio for 2023 to about 3.8% of gross domestic product, up from the 3% limit it set in March. The budget changes from the Standing Committee of the National People’s Congress were Beijing’s latest attempt to shore up support for the country’s financial markets and economy, which are struggling amid a persistent housing market crisis. 

3.    Country Garden Holdings, previously China’s largest property developer, defaulted on its offshore debt payments for the first time after it was unable to meet interest payments at the end of a 30-day grace period.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

Singapore STI ended with 0.48% weekly loss. The index had a short-lived rebound on Tuesday following previous week’s 3.42% selloff but unable to hold on its gains, ended the week in a range consolidation. UOB bank saw its price nosedived in last two days, probably due to disappointing earning result, UOB was a big dragger to STI’s underperformance this week. Weekly top index gainers were Genting Sp and Wilmar with 4.19% and 2.33% respectively; top loser HKland lost 6.51%.

STI weekly chart

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

Nasdaq Near Bear Market Territory Due to Concerns of Bond Yield and War

Weekly Wrap Content for the week of Oct 20:

1. Week 42 major indexes performance;

2. Week 42 US sector indexes performance;

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

U.S.

For the week of 20 Oct, U.S three major indexes declined as geopolitical concerns, tough talk from Federal Reserve officials, and a rise in long-term bond yields to new 16-year highs appeared to weigh on sentiment. The S&P 500 Index recorded its biggest weekly decline in a month. The Nasdaq Composite Index fared worst among the major benchmarks and nearly moved back into bear market territory, ending the week 19.91% below its early-2022 intraday highs. Refer to major indexes’ weekly performance table below.

Key highlights for the week and outlook:

1.    Geopolitical concerns. Deepening tensions in the middle east later in the week appeared to affect market sentiment. Shares fell sharply on Thursday afternoon, following reports that a U.S. Navy destroyer had shot down a cruise missile apparently headed toward Israel. Reports of a drone attack on a U.S. base in Iraq also seemed to weigh on sentiment. 

2.    Bond yield hit 16 years high. The yield on the 10-year U.S. Treasury note nearly touched 5% in intraday trading at the end of the week, reaching its highest level since July 2007. Higher yields can increase the cost of borrowing, put downward pressure on stock valuations, and weigh on bond price returns. 

3.    Fed policymakers remain “unconvinced” inflation is tamed. The Wall Street Journal reported that markets pulled back sharply after Powell stated on the Economic Club of New York that he saw no signs that the current stance of Fed policy would push the economy into a recession. 

4.    Economic data surprises may have reinforced worries that rates would remain “higher for longer”. Data release on Tuesday showed retail sales rose 0.7% in October, roughly double consensus expectations. Meanwhile, weekly jobless claims surprised on the downside, falling below 200,000 for the first time since January.

SPX sectors in play

Nine out of the 11 sectors of the SPX index closed negative for the week. Within the index, growth stocks lagged their value counterparts. Energy(XLE) and defensive stocks such as Consumer Staples(XLP) outperformed. Consumer Discretionary(XLY) and Real Estate(XLRE) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The three major indexes declined for the week. All three closed at low of their four-week range bottom respectively and lowest since end of May. Notably, SPX closed just beneath its 200dma at 4233 level for the first time since Mar 20 this year. Click below three indexes for their weekly charts respectively in a new window.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

 

China/HK

Stocks in China fell sharply as deepening property sector woes offset optimism about a better-than-expected gross domestic product report. The Shanghai Composite Index(SSE) declined 3.44% while the blue-chip index CSI 300 gave up 4.17%, erasing all gains from the reopening rally earlier in the year. In Hong Kong, the benchmark Hang Seng Index fell 3.6% (Refer to the above weekly performance table).  

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

1.    Country Garden, formerly China’s largest property developer, announced that it was unable to meet all its offshore debt payments after it received a 30-day grace period in August. Meanwhile, home price data showed no letup in the ongoing property market slump. New home prices in 70 of China’s largest cities fell 0.3% in September from August, extending declines for the third consecutive month. 

2.    Concerns about China’s property market outweighed a surprisingly strong gross domestic product release, which showed that China’s economy expanded an above-forecast 4.9% in the third quarter over a year earlier, slowing from the 6.3% rise recorded in the second quarter. 

3.    Other data showed that parts of China’s economy may be stabilizing. Retail sales rose a better-than-expected 5.5% in September from a year earlier, up from 4.6% in August. Industrial production growth was unchanged from August, while urban unemployment fell slightly.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index fell 3.42% for the week, marked its worst weekly decline in over two months. The index dropped below 3100 support level and closed at its lowest since 28 Oct 2022. All 30 STI index stocks fell this week. Worst performers were Kep DC Reit and YZJ Ship with 15% and 12% losses respectively.

STI weekly chart

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

Stocks Mixed As Earnings Season Kicks off

Weekly Wrap Content for the week of Oct 13:

1. Week 41 major indexes performance;

2. Week 41 US sector indexes performance;

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

U.S.

For the week of 13 Oct, U.S three major indexes mixed as investors weighed inflation data against dovish signals from Federal Reserve officials. Large-cap value stocks outperformed, helped by earnings beats from Citigroup, Wells Fargo, and JPMorgan Chase. The banking giants kicked off the unofficial start to third-quarter earnings reporting season on a positive note, as their profits got a boost from higher interest rates. Refer to major indexes’ weekly performance table below.

Key highlights for the week and outlook:

1.    Potential widening of war between Israel and Hamas boosted Gold, energy shares and defensive shares while weighing on airlines and cruise operators. 

2.    Rates. Market sentiment turns to bullish after few Fed officials’ dovish comments on future rates hikes. By the end of the week, federal funds futures were pricing in only a 5.7% chance of a rate hike at the next Fed meeting in November versus 27.1% the previous week, according to the CME FedWatch Tool. 

3.    Producer inflation surprises to the upside, but consumer inflation falls to two-year low. Core consumer price index (CPI) inflation data, released Thursday, was in line with expectations, rising 4.1% for the year ended September 30, its slowest pace in two years.

SPX sectors in play

Nine out of the 11 sectors of the SPX index closed positive for the week. Within the index, Energy(XLE) and defensive stocks such as Utilities(XLU) outperformed. Consumer Discretionary(XLY) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The three major indexes mixed for the week. The SPX and Dow closed and Nasdaq closed lower. Both SPX and Nasdaq closed below 50dma and Dow was the weakest among the three, closed just above 250dma. Click below three indexes for their weekly charts respectively in a new window.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Financial markets in China declined in the first full week of trading after the Golden Week holiday, as softer inflation and trade data renewed concerns that the economy may slip back into deflation. The Shanghai Composite Index(SSE) dropped 0.72% while the blue-chip index CSI 300 slipped 0.71%.  In Hong Kong, the benchmark Hang Seng Index gained 1.87% (Refer to the above weekly performance table).  

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

1.    China’s CPI remained unchanged in September from a year earlier, following August’s 0.1% rise, largely due to weaker food prices. Producer prices fell an above-consensus 2.5% from a year ago but eased from the 3% drop the previous month. 

2.    Trade data came in above expectations but remained weak. Overseas exports fell 6.2% in September from a year earlier, slower than the 8.8% drop in August. Imports also shrank by 6.2%, better than the 7.3% contraction in August and marking the seventh straight month of declines. 

3.    China Securities Regulatory Commission (CSRC) announced a ban on domestic brokerages and their overseas units from accepting new mainland clients for offshore trading.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index gained 0.36% for the week, market appears subdued within a tight range bound and low daily turnover. The overall daily turnover dropped to below S$600mil  on Monday- a level believed never seen for quite some time. For perspective, Average daily turnover for Sep was at S$867mil, down from S$1072 from Aug. It’s on the trending down, based on SGX monthly data. There were 20 out of 30 stocks recorded positive weekly return on the STI index. Top gainer ST Engineering +3.39% while the worst performer was DFIRG-4.07%.

STI weekly chart

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

Stocks Mixed on High Bond Yield and Jobs Data

Weekly Wrap Content for the week of Oct 6:

1. Week 40 major indexes performance;

2. Week 40 US sector indexes performance;

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

U.S.

For the week of 6 Oct, U.S three major indexes mixed over another week of top-heavy trading in which large-cap growth stocks—and the mega-cap information technology and internet stocks. The surge in bond yields has been in complete control of market moves recently, with rates rising and stocks pulling back. With strong economic data instigating worries over upcoming Fed decisions, the path of least resistance may be higher bond yields for a while longer. This week brings the one-year anniversary of 2022's bear-market low.  Refer to major indexes’ weekly performance table below.

Key highlights for the week and outlook:

1.    Bond yield surged to 16-year highs. Ten-year yields moved above 4.89% last Friday, a rate last seen in 2007. The surge in bond yields has been in complete control of market moves recently, with rates rising and stocks pulling back. 

2.    September’s job report released on Friday showed the non-farm payrolls 336k far exceeded expectations of 170k and accelerated from the pace of last few months. Rates jumped and stocks dipped in response, as this did little to ease the cautious outlook around the Fed and inflation.

SPX sectors in play

Three out of the 11 sectors of the SPX index closed positive for the week. Within the index, growth stocks clearly outperformed. Large-cap growth stocks outperformed their value counterparts. Technology(XLK), Communication Services(XLC) leading. Energy(XLE) stocks, on the other hand, lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The three major indexes mixed for the week. The SPX closed first week positive in five-week time and Nasdaq rebounded for 2^nd week. On the other hand, Dow closed lower five weeks in a row. Click below three indexes for their weekly charts respectively in a new window.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Financial markets in China were closed last week for the Mid-Autumn Festival and National Day holiday and will reopen Monday, October 9. The Hong Kong Stock Exchange resumed trading last Tuesday, and the benchmark Hang Seng Index declined 1.82% for the holiday-shortened week. (Refer to the above weekly performance table).  

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

1.    Factory productions picks up for first time in six months. 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. 

2.    Domestic activity in China picked up significantly during the eight-day holiday. Approximately 395 million trips were taken via road, rail, air, and waterways in the first four days of the holiday, almost 76% above the prior year period, according to the Ministry of Transport. Box office sales reached RMB 1.2 billion in the first three days, ahead of sales reported a year earlier. Meanwhile, the offshore gambling hub of Macau received more than 160,000 visitors from mainland China and Hong Kong on Saturday, marking the highest single-day total since the pandemic. 

3.    China’s crisis-hit property sector showed slight improvement in September.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index was down 1.34% for the week. The index tested 3230-3250 key support area and rebounded on Friday. has been in five weeks consolidation in the range of 3290-3189. There were 4 out of 30 stocks recorded positive weekly return in the STI index. Top gainer SIA+1.39%, CDL, OCBC and SGX also recorded moderate weekly gains. The worst performer was Seatrium with 8.21% loss.

STI weekly chart

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