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.