Stocks Build on Gains in Light Trading Week

Weekly Wrap Content for the week of Nov 24:

1. Week 47 major indexes performance;

2. Week 47 US sector indexes performance;

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

U.S.

For the week of 24 Nov, U.S three major indexes closed higher for 4^th straight over a quiet holiday-shortened trading week—markets were shuttered Thursday in observance of the Thanksgiving holiday and closed early Friday. The week brought one carefully watched third-quarter earnings report, with shares in artificial intelligence chipmaker NVIDIA—recently, the world’s sixth-largest company by market capitalization—falling after the company beat earnings and revenue estimates but issued cautious guidance because of export restrictions to China. NVIDIA’s weakness was reflected in the underperformance of the Nasdaq Composite Index, but growth stocks outperformed value stocks overall. Refer to major indexes’ weekly performance table below.

Key highlights for the week and outlook:

1.    The stock market comes into Thanksgiving this year on an upswing, adding to a strong year-to-date gain. In Fact, the SPX is up over 8% for the month of Nov thus far, the Nasdaq is over 10%, and the Dow is over 7%. 

2.    Ongoing moderation in inflation. Headline CPI inflation for Oct came down to 3.2% yoy, while core inflation moderated to 4.0%. The recent surprises lower in inflation have helped pushed Treasury bond yields lower and have given the market a catalyst to move higher. 

3.    Fed interest rates. After the lower inflation readings for the month of October, the market probability of a rate hike at the December FOMC meeting has fallen to close to zero. Markets have embraced the idea that the Fed may be done (for now), and that both inflation and rates could be normalizing over time. 

4.    Signs of cooling economic growth. While the economy has shown some early signs of moderating – lower retail sales, slightly higher jobless claims – It is believed this goldilocks pace of slowing (not too hot, not too cold) has been supportive of the recent rally.

SPX sectors in play

All 11 sectors of the SPX index closed higher in the week. Healthcare(XLV) and Communication Services(XLC) were among top performers while Energy(XLE) and Utilities(XLU) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The major three U.S stock indexes all are trading around their Jul high after a four-week rally. The SPX index has gained over 10% during the period. 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 retreated as news that Beijing may introduce fresh stimulus measures for the property sector was not enough to offset broader economic woes. The Shanghai Composite Index(SSE) gave up 0.44%, while blue chip CSI 300 lost 0.84%. In Hong Kong, the benchmark Hang Seng Index gained 0.6%. (Refer to the above weekly performance table).  

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

1.    Chinese regulators formulated a funding plan for property developers in its latest efforts to consolidate growth as the country grapples with an ongoing property crisis. The list, which reportedly includes 50 private and state-owned developers, will act as a guide for financial institutions to deliver a range of financing measures to strengthen balance sheets, according to Bloomberg. The reports follow recent property data that underscored an ongoing downturn in a key sector for China’s economy. Property investment, sales, and new home prices slumped in October. 

2.    In monetary policy news, Chinese banks left their one- and five-year loan prime rates unchanged, as expected, after the People’s Bank of China (PBOC) kept its medium-term lending rate on hold the prior week. More recently, expectations that the PBOC may cut its reserve ratio requirement rose as the latest economic data provided a mixed outlook for China. 

3.    Many economists anticipate that Chinese government advisers may propose an economic growth target of around 5% in 2024 at the annual Central Economic Work Conference in December.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

Singapore STI fell 0.96% this week, the loss much led by two local banks- DBS and OCBC which lost 2.66% and 2.31% respectively. While UOB bank lost 0.22% this week. SingTel was another big loser with 3% down. STI was trading within its four-week rangebound.

STI weekly chart

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