Stocks End Higher Following Inflation Data

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Weekly Wrap Content for the week of Jan 26:

1. Week 4 major indexes performance;

2. Week 4 US sector indexes performance;

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

U.S.

For the week ended 26 Jan, U.S three major indexes recorded another week of gains, bring the Dow Jones Industrial Average(DJI) and the S&P 500 Index(SPX) to new all-time highs and marking the 12th weekly advance out of the last 13 for the latter. The gains were relatively broad, although the small-cap Russell 2000 Index remained nearly 20% below its all-time intraday high. Refer to major indexes’ weekly performance table below.

Key highlights for the week and next:

1.    GDP. Q4 GDP growth exceeded forecasts, coming in at 3.3% annualized, beat expectations of 2.0% growth. Over the year as a whole, the economy grew 2.5%, up from the 1.9% pace in 2022. 

2.    PMI. U.S both manufacturing and services PMI data for January came in expansionary territory. Manufacturing PMI hitting 50.3 in January, well above expectations of 47.6 and higher than last month's 47.9 reading and reaching its highest reading since October 2022. Meanwhile, the services PMI came in at 52.9 for January, also in expansionary territory, above expectations of 51.5 and last month's reading of 51.4. 

3.    Inflation. The core personal consumption expenditure (PCE) price index, the Fed’s preferred inflation gauge, rose 2.0% in the fourth quarter over the year before—right in line with expectations and the Fed’s long-term target. Core PCE inflation for December is now 2.9% year-over-year, below last month's 3.2%, and below 3.0% for the first time since 2021. The ongoing moderation in inflation, despite above-trend economic growth, has led to optimism that the Federal Reserve may be able to start cutting policy rates rapidly this year to return to more neutral rates.   

4.    FOMC. All eyes turn to the next week FOMC meeting Jan 31, where the Fed is expected to keep interest rates on hold at 5.25% - 5.5%. While markets are currently pricing in about six Fed rate cuts in 2024, the Fed's own "dot plot" from its December meeting indicates about three rate cuts ahead.

SPX sectors in play

Eight out of the 11 sectors in SPX closed with weekly gains. Energy(XLE) and Communication Services(XLC) outperformed. Technology shares(XLK) took pressure after Intel (INTC) released disappointing earnings guidance late Thursday, sending the chipmaking bellwether reeling 12%. Intel's results preceded a big week ahead for mega-cap earnings, with Apple (AAPL), Amazon (AMZN), Google parent Alphabet (GOOGL), Facebook parent Meta Platforms (META), and Microsoft (MSFT) expected to report results.

While Consumer Discretionary(XLY) lagged. Major movers included Tesla, which fell sharply after the company missed both earnings and revenue estimates and warned of slower growth in 2024. Conversely, Netflix recorded solid gains after an upside surprise in subscriber additions. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All three major indexes recorded 3^rd weekly gains in a row. Both DJI and SPX made new all-time highs and marking the 12^th weekly advance out of the last 13 for the latter. 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 advanced after Beijing stepped in with forceful measures to support the economy. The Shanghai Composite Index(SSE) rose 2.75%, while the blue chip CSI 300 gained 1.96%. In Hong Kong, the benchmark Hang Seng Index advanced 4.2%. (Refer to the above weekly performance table).  

Key highlights for the week and next:

1.    The People’s Bank of China (PBOC) said it would cut its reserve ratio requirement (RRR) by 50 basis points for most banks on February 5, marking the central bank’s first cut in banks’ required reserves this year. PBOC Governor Pan Gongsheng also announced that the central bank will lower interest rates by 25 basis points for refinancing and rediscounting loans to support agriculture and small businesses from January 25. 

2.    Chinese banks left their one- and five-year loan prime rates unchanged as expected after the PBOC kept its medium-term lending rate on hold the prior week. 

3.    Chinese regulators removed the draft rules imposed on online video games in late December that were aimed at curbing spending and rewards. The regulations wiped off nearly USD 80 billion in market value from some of China's largest gaming companies when they were first announced as investors grew concerned about the possibility of another crackdown on the sector.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI inched higher 0.23% this week. Technically the local index continues its sideways trading within prior week’s trading range, between its 20 and 50dma. SIA and Genting Sp were among the top gainers of the week with 2.77% and 2.54% up, Jardine C&C and Seatrium were among top losers of the week, lost 8.52% and 7.14% respectively.

STI weekly chart

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

Stocks End Higher While Rate Cut Expectations Fading

Weekly Wrap Content for the week of Jan 19:

1. Week 3 major indexes performance;

2. Week 3 US sector indexes performance;

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

U.S.

For the week ended 19 Jan, U.S three major indexes ended mostly higher over the holiday-shortened week, although the advance was narrow—an equally weighted version of the S&P 500 Index recorded a modest loss—and heavily focused on growth stocks. Refer to major indexes’ weekly performance table below.

Key highlights for the year and outlook:

1.    U.S Q4 GDP will be released on Jan 25, which could offer a clue on the direction of economic growth and consumption coming into the new year. Expectations are for GDP growth to fall from 4.9% annualized to around 2.0% in the fourth quarter. 

2.    PCE and Core PCE inflation data on Jan 26. The inflation data thus far in 2024 has been more mixed. The CPI (consumer price index) inflation figures have surprised to the upside, while the PPI (producer price index) inflation data have surprised to the downside. Next key datapoint for inflation will be PCE (personal consumption expenditure) inflation, which will be released on January 26 and is often considered the Fed's preferred inflation measure. Expectations are for headline PCE inflation for December to remain flat at 2.6% YoY, while core PCE inflation is expected to fall from 3.2% to 3.0%. Fed target for PCE is 2.4% in 2024. 

3.    FOMC meeting Jan 31. The expectation is for the Fed to keep interest rates on hold at 5.25% - 5.5% at the January meeting, but investors will be listening intently for any clues on whether the Fed is considering an interest-rate cut at the March meeting. Expectations for rate cuts in 2024 fell sharply over the week, with futures markets pricing only a 13.1% chance of seven or more rate cuts in 2024 as of the close of trading on Friday versus 61.5% the week before, according to the CME FedWatch Tool.

SPX sectors in play

Five out of the 11 sectors in SPX closed with weekly gains. Information technology stocks(XLC) and Communication Services(XLC) outperformed, helped by a rally in semiconductor shares. Artificial intelligence (AI) chip giant NVIDIA was particularly strong, as was rival Advanced Micro Devices (AMD).  While Energy stocks(XLE) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All three indexes hit new highs this week. 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 slumped as the latest indicators underscored the weak outlook for the economy. The Shanghai Composite Index(SSE) fell 1.72%,  its eighth weekly drop in the past nine. While blue chip CSI 300 gave up 0.44%, its ninth weekly drop in the past 10 weeks. In Hong Kong, the benchmark Hang Seng Index plunged 5.76%. (Refer to the above weekly performance table).  

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

1.    China’s GDP expanded 5.2% in the fourth quarter over a year earlier and for the full year of 2023, meeting Beijing’s official annual growth target. On a quarterly basis, the economy grew 1.0%, up from the third quarter’s 0.8% expansion. 

2.    In monetary policy news, the People’s Bank of China (PBOC) injected an above-forecast RMB 995 billion into the banking system via its medium-term lending facility, but left the lending rate unchanged, disappointing traders. Nevertheless, many analysts predict that the PBOC will loosen policy this year and could cut its reserve requirement ratio to boost demand. 

3.    China’s new home prices fall at steepest pace in almost nine years. New home prices fell 0.4% in December, down from November’s 0.3% decline, marking the sixth consecutive monthly drop and the fastest fall since February 2015, according to the statistics bureau.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI fell 1.24% in the week. Technically the local index has been sideways trading between its 200 and 50dma range over past two weeks. Only five out of 30 STI index stocks closed with weekly gains. YZJ was the top gainer with 3.14% up, HKland was the worst performer with 6.29% down.

STI weekly chart

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

U.S Stocks Resume Advance as Earnings Season Kicks Off

Weekly Wrap Content for the week of Jan 12:

1. Week 2 major indexes performance;

2. Week 2 US sector indexes performance;

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

U.S.

For the week ended 12 Jan, U.S three major indexes moved higher, with large-cap growth stocks and the tech-heavy Nasdaq outperforming the broader market. Several tech giants recorded solid gains, including Facebook parent Meta Platforms and chipmaker NVIDIA. Energy stocks underperformed as oil prices pulled back early in the week. The week brought the unofficial start of earnings season, with the nation’s four largest banks—JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo—reporting fourth-quarter results on Friday. Coming Monday is a public holiday, there is no trading. Refer to major indexes’ weekly performance table below.

Key highlights for the year and outlook:

1.    Uptick in CPI as shown on latest data report on Thursday. All eyes were on the release of the consumer price index (CPI), which increased 3.4% in December from a year ago, a slight acceleration from last month's 3.1% reading. Core CPI, which excludes food and energy, continued to slow, falling to 3.9% from 4%. While that was the lowest reading in two and half years, and was mostly in line with forecasts, core inflation is still well above the Fed's target 2%. The trend of inflation remains lower, but the road to the Fed's 2% target could be bumpy. 

2.    Fed rate cuts is likely on the way. The bond market is currently pricing in a 75% chance that the first rate cut will be delivered in March and that there will be two more rate cuts by June. It is possible that at the first Fed meeting of the year at the end of the month, policymakers might push back against these expectations. There will be two more inflation readings and two jobs reports before March, so the debate will continue. 

SPX sectors in play

Seven out of the 11 sectors in SPX closed with weekly gains. Large-cap growth stocks such as Tech(XLK) and Communication Services(XLC) outperforming the broader market. While Energy stocks(XLE) underperformed as oil prices pulled back early in the week. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The SPX and Nasdaq have recovered full losses from previous week, while DJI recovered most of its previous loss. All three indexes uptrend are 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

Stocks in China retreated as data showed that China’s deflationary cycle persisted into December, raising expectations of increased government support in 2024. The Shanghai Composite Index(SSE) fell 1.61%, while blue chip CSI 300 gave up 1.35%. In Hong Kong, the benchmark Hang Seng Index fell 1.76%. (Refer to the above weekly performance table).  

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

1.    The consumer price index fell 0.3% in December from the prior-year period, the third monthly decline, easing from November’s 0.5% drop as lower pork prices continued to weigh on food prices. The producer price index declined 2.7% from a year ago compared with November’s 3% drop, and marked the 15th monthly decline. 

2.    The latest inflation data raised expectations for some analysts that China’s central bank would lower its key policy rate and inject more cash into the financial system at its next policy meeting amid worries that sustained deflation will increasingly weigh on the economy. 

3.    China’s exports rose a better-than-expected 2.3% in December from a year earlier, up from a 0.5% rise in November.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI ticked up with 0.23% weekly gain. The local index traded within its previous week’s range around 200dma. About half of the 30 STI index stocks closed with weekly gains. Seatrium was the top gainer with 7.7% up. Two banks DBS and OCBC also among top gainers. Top losers were DFI and CDL with 4% and 3% losses.

STI weekly chart

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

New Year, Stocks Start Down

Weekly Wrap Content for the week of Jan 5:

1. Week 1 major indexes performance;

2. Week 1 US sector indexes performance;

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

U.S.

For the first week of new year 2024, U.S three major indexes declined. After nine straight weeks of gains, the S&P 500 finally took a breather, falling moderately last week, primarily due to some beginning-of-the-year repositioning, as well as a to-be-expected break after a stellar 16% rally in the final two months of the year. Investors appeared to rotate into sectors that lagged in 2023, including utilities, energy, consumer staples, and health care. Conversely, a slide in Apple shares following an analyst downgrade weighed on the large-cap, technology-heavy Nasdaq Composite Index. Refer to major indexes’ weekly performance table below.

Key highlights for the year and outlook:

1.    Stocks declined and interest rates moved higher last week, ending the S&P 500's nine-week winning streak. After the sharp move higher for equities over the last few months, it's not surprising to see markets take a breather. 

2.    Fed rate cuts are coming, but markets already factored in as many as 100 basis points(1%) cuts. The minutes from the Federal Reserve's December meeting were released last week, offering investors a look into policymakers' discussions and expectations. It confirmed that rates has hit its peak, also an acknowledgement that further hikes could be required if inflation were to make a surprise turn higher. 

3.    Geopolitical concerns appeared to weigh on sentiment as 2024 trading began.  1) In advance of upcoming elections in Taiwan, Chinese President Xi Jinping stated that “the reunification of the motherland is a historical inevitability.” 2) A further escalation of tensions in the Red Sea, with Iran sending a warship and the U.S. sinking attacking ships armed by Houthi rebels from Yemen. 

4.    The closely watched monthly nonfarm payroll report on Friday showed an add of 216k jobs in December, well above consensus forecasts. The workforce participation rate fell back unexpectedly to 62.5%, however, its lowest level since February. The ISM’s Non-Manufacturing Employment Index also fell sharply into contraction territory and hit its lowest level since July 2020. 

5.    The yield on the benchmark 10-year U.S. Treasury note ended higher for the week and moved above the 4% threshold for the first time since mid-December. (Bond prices and yields move in opposite directions.)

SPX sectors in play

Four out of the 11 sectors in SPX closed with weekly gains. Investors appeared to rotate into sectors that lagged in 2023, including utilities(XLU), energy(XLE), consumer staples(XLP), and health care(XLV). While Consumer Discretionary (XLY) and Tech(XLK) lagged following a downgrade on Apple shares. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three major indexes closed moderately down after nine weeks up in a row. A breather is needed for a healthy bull market to continue. Uptrend has been strong so far. 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 retreated amid persistent concerns about its economy. The Shanghai Composite Index(SSE) fell 1.54%, while blue chip CSI 300 gave up 2.97%. In Hong Kong, the benchmark Hang Seng Index declined 3%. (Refer to the above weekly performance table).  

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

1.    Economic data for December continued to show a varied picture of China’s economy. The official PMI contracted for the third consecutive month, falling to a below-consensus 49.0 in December. The nonmanufacturing PMI rose to 50.4 from 50.2 in November as stronger construction activity offset weakness in the services sector. Separately, the private Caixin/S&P Global PMI reading rose to an above-forecast 50.8 in December from November’s 50.7, its strongest reading since August. The private Caixin survey of services activity reached its highest level since July and beat estimates. 

2.    More evidence of China’s property slump underscored concerns about a key growth sector. New home sales by the country’s top 100 developers fell 34.6% in December from the prior-year period, up from the 29.6% drop in November, according to the China Real Estate Information Corp.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI down for 1^st week after a four-week winning streak. STI retreated after testing resistance level around 3250 early in the week. Most of the 30 STI index stocks start new year with losses, except YZJ Ship and ThaiBev closed with 4.03% and 2.86% gains. Kep DC Reit was the worst performer with 5.64% loss.

STI weekly chart

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

Stocks End Mixed to Close Out Strong Year 2023

Weekly Wrap Content for the week of Dec 29:

1. Week 52 major indexes performance;

2. Week 52 US sector indexes performance;

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

U.S.

For the week of 29 Dec, U.S three major indexes were mixed for the holiday-shortened week. The S&P 500 Index marked its ninth straight weekly gain—its longest stretch since 2004—and briefly moved within 0.53% of its all-time intraday high. The week closed out a strong year for all the major indexes, led by the Nasdaq Composite, which recorded its sixth-biggest annual gain since the index was launched in 1971. Refer to major indexes’ weekly performance table below.

Monthly major indexes peformance for the month of December

Key highlights for the year and outlook:

1.    Easing in U.S inflation was undoubtedly one of the biggest drivers behind the year’s strong return. Since inflation peaked at 9.1% in June 2022, the consumer price index (CPI) has been cut by two-thirds to 3.1% in November 2023. 

2.    U.S regional-bank crisis in March after the failure of Silicon Valley Bank(SVB) and Signature Bank, which then spread to First Republic Bank and Credit Suisse. This crisis triggered by the rapid rate hikes by the Fed and caused a classic bank run. 

3.   U.S strong labour market and consumer spending defied expectation for a slowdown. 

4.    The “Magnificent 7” drove the gains, leaving everything else behind. The mega-cap technology companies powered the broad market higher. The so-called "Magnificent 7" (Amazon, Apple, Alphabet, Meta, Microsoft, NVIDIA and Tesla) were responsible for 90% of the S&P 500 gains, as innovation around AI took center stage and captured investors' interest. 

5.    Rates cut expectation in 2024. The drop in yields and rally in stocks the last two months of the year have eased financial conditions, raising the chances of the economy achieving a soft landing. Markets have now gone a step further, pricing in six rate cuts in 2024, which is more than twice as much as Fed officials are projecting.

SPX sectors in play

Eight out of the 11 sectors of the SPX closed with gains in the week. Consumer Staples(XLP) and Healthcare(XLV) out performed and Energy(XLE) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The S&P 500 Index marked its ninth straight weekly gain—its longest stretch since 2004—and briefly moved within 0.53% of its all-time intraday high. The week closed out a strong year for all the major indexes, led by the Nasdaq Composite, which recorded its sixth-biggest annual gain since the index was launched in 1971. The oldest index in history Dow closed at record high. 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 rose in the final week of trading for 2023 as the government announced new online game approvals and calmed fears about a potential clampdown on the gaming sector. The Shanghai Composite Index(SSE) gained 2.06%, while blue chip CSI 300 added 2.81%. In Hong Kong, the benchmark Hang Seng Index advanced 4.33%. (Refer to the above weekly performance table).  

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

1.   Chinese regulators announced a bout of fresh approvals for new online games aiming to support the industry after a draft of new rules designed to curb spending caused stocks to plummet the prior week. Shares of Tencent, one of China’s largest online gaming companies, fell more than 12% amid concerns that the government may reinstate controls on big technology companies following its two-year crackdown that started in 2021, according to Bloomberg. However, stocks clawed back some of their losses as Beijing’s softer stance appeared to restore investor confidence. 

2.    Profits at industrial firms increased by 29.5% in November from the prior-year period and rose from October’s 2.7% gain, as Beijing’s latest raft of stimulus measures supported growth. Economists predict that China’s gross domestic product growth will slow to 4.6% in 2024 from 5.2% in 2023 as persistent property woes and growing deflationary pressures weigh on its outlook.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI ended positive in a relatively quiet week holiday-shortened trading week- its 4^th consecutive weekly gain, which made the index to recover almost all its losses, ended the year 2023 with modest 11.05points or 0.34% loss. Weekly candlestick appears bullish with immediate upside technical resistance at 3250 level.  

STI weekly chart

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