Stocks Extend 7th Straight Weekly Gains, Dow Hits Record High

Weekly Wrap Content for the week of Dec 15:

1. Week 50 major indexes performance;

2. Week 50 US sector indexes performance;

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

U.S.

For the week of 15 Dec, U.S three major indexes recorded their 7^th consecutive week of gains- the longest streak for the SPX since 2017. The gains lifted the both SPX and Nasdaq to 52-week highs and the Dow to an all-time record.  The SPX is now up nearly 23% for the year, with much of these returns still attributed to a handful of mega-cap technology stocks. A key driver behind these broad-based moves was last week's Federal Reserve meeting, which affirmed that rate hikes are likely over, and rate cuts could begin in 2024. With inflation cooling, yields moving lower, and the economy potentially on a glide path towards a soft landing, markets have much to celebrate this holiday season. Refer to major indexes’ weekly performance table below.

Key highlights for the week and outlook:

1.    Last FOMC meeting this year on Thursday proved to be a pivotal one for markets. Market estimates pointed to three rate cuts in 2024. 

2.    Stocks continue to rally in both stocks and bonds after Fed meeting. S&P 500 climbed over 2.0% last week after the dovish outlook from the Federal Reserve, and the index is up nearly 5% over the past month. As highlighted earlier, we are starting to see a broadening of market leadership emerge, especially as the notion of lower rates next year is embraced by investors. Over the past month, the Magnificent 7 stocks, which have led most of the year, were up just 1.5%, while the Russell 2000 small-cap index, a laggard in 2023, was up nearly 11%. 

3.    Inflation continue slows down. CPI data on Tuesday was in line with estimates, with core (excluding food and energy) inflation staying steady at a year-over-year rate of 4.0%.

SPX sectors in play

All 11 sectors of the SPX closed with gains in the week. Real Estate(XLRE) and Consumer Discretionary(XLY) among top gainers. While Communication Services(XLC) and Healthcare(XLV) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Both SPX and Nasdaq indexes hit their 52-week highs and the Dow to an all-time record. Weekly candlesticks appear very bullish no signs of immediate reversal. 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 declined as persistent deflationary pressures weighed on the economic outlook. The Shanghai Composite Index(SSE) fell 0.91%, while blue chip CSI 300 lost 1.7%. In Hong Kong, the benchmark Hang Seng Index rose 2.8% amid a global stock rally after the Fed kept interest rates steady on Wednesday and signaled it may start cutting them next year. (Refer to the above weekly performance table).   

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

1.    Deflation risk. China’s consumer price index fell 0.5% in November from the prior-year period, accelerating from October’s 0.2% contraction and marking the steepest drop since November 2020 as lower pork prices weighed on food prices. Meanwhile, the producer price index dropped a bigger-than-expected 3% from a year ago, marking the 14th monthly decline. Deflation is concerning for China since economists worry it could unleash a downward spiral of economic activity. 

2.    Other November data continued to paint a mixed picture of China’s economy. Industrial production grew a better-than-expected 6.6% last month from a year earlier, while retail sales surged 10.1% but missed expectations. Fixed asset investment rose a weaker-than-forecast 2.9% in the first 11 months of the year as declines in infrastructure growth and real estate investment deepened. 

3.    Senior officials drafted the agenda for China’s economy in 2024 during the Central Economic Work Conference, an annual meeting that sets economic policy for the coming year. Officials reportedly set out guidelines aimed at boosting domestic consumption and investment to drive growth as weak consumer confidence and a property sector downturn remain key risks for the economy.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI has been in sideway consolidation for two months near its past two and half year major technical support around 3060 area, after it cycled down in July from its year high near 3400. 3050-3060 area should provide a strong technical support for the index going forward, it appears there are plenty of room to upside. 

The interest-rate-sensitive parts of the market performed better in the week, such as SG REITs and developers outperformed. It should be a big relief going forward for the badly battered REITs sector if interest rates were to stabilise or cut down.

Among the index component stock, CDL, Mapletree Pan Asia Com, MIT, CICT UOL were among top gainers with more than 5% up. While Venture and Wilmar were laggers with 3% and 4.7% losses respectively.

STI weekly chart

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