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Sunday, October 15, 2023

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.

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