SPX Ended 2nd Weekly Down Due to Inflation Concerns

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Weekly Wrap Content for the week of Mar 15:

1. Week 11 major indexes performance;

2. Week 11 US sector indexes performance;

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

U.S.

For the week ended Mar 15, the three major U.S. indexes ended modestly lower, as investors weighed upside surprises in inflation data and signs of moderating consumer spending. The DJI held up best among the major indexes and reached a record high on Wednesday before falling back to end the week. Both SPX and COMP posted their second-straight weekly declines. Energy shares outperformed on the back of higher oil prices, while technology shares lagged due to weakness in NVIDIA and other chipmakers. Refer to major indexes’ weekly performance table below.

Key highlights for the week and next:

1.    Data released on Tuesday showed the Consumer Price Index (CPI) rose 0.4% in February, in line with consensus expectations, but core prices (less food and energy) rose a tick more than expected, also by 0.4%. 

2.    Data released on Thursday for the producer price index (PPI), also rose 0.6% in February, roughly double consensus estimates and the most in six months. The stronger-than-expected inflation readings seemed to dampen hopes for Federal Reserve interest rate cuts. 

3.   Investors looked ahead to next week's(21/3/2024) Federal Open Market Committee (FOMC) meeting. The Fed is widely expected to keep its benchmark rate unchanged, and this week's inflation data likely will make central bank leaders reluctant to cut any time soon, analysts said.

SPX sectors in play

Four out of 11 sectors in the SPX closed with weekly gains. Energy(XLE) shares outperformed on the back of higher oil prices, while technology(XLK) shares lagged due to weakness in NVIDIA and other chipmakers. Among tech companies, software maker Adobe (ADBE) tumbled 14% after the company late Thursday released softer-than-expected guidance for the current quarter. Salesforce (CRM) sank 3% and Amazon (AMZN) shed 2.4% to lead Dow Jones Industrial Average(DJI) decliners. Consumer Discretionary(XLY) sector also lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Both SPX and COMP indexes posted their second-straight weekly declines. The DJI held up best among the major indexes and reached a record high on Wednesday before falling back to end the week. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Stocks in China rose as the government’s recent market stabilization measures boosted investor confidence despite a weak economic outlook. The Shanghai Composite Index(SSE) rose 0.28%, while the blue chip CSI 300 added 0.71%. In Hong Kong, the benchmark Hang Seng Index rallied 2.25% after last two weeks declines (Refer to the above weekly performance table).   

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

1.    Prices stop falling in China for first time in half a year. China’s CPI index rose an above-consensus 0.7% in February from the prior-year period, reversing January’s 0.8% decline and marking the first positive reading since August 2023 as food and services prices increased and consumption surged during the weeklong Chinese New Year holiday. However, the producer price index fell a bigger-than-expected 2.7% from a year ago, accelerating from January’s 2.5% drop and marking the 17th monthly decline, the longest streak of declines since 2016, according to Bloomberg. Investors remained cautious on calling a trough to deflation as China grapples with weak domestic demand. 

2.    The People’s Bank of China injected RMB 387 billion into the banking system via its medium-term lending facility and left the lending rate unchanged at 2.5%, as expected. 

3.    The State Council pledged to increase spending by at least 25% by 2027 from last year to encourage consumers and businesses to replace old equipment and goods. 

4.    China’s new home prices fell 0.3% in February for the eighth straight month, according to the statistics bureau. The data showed no sign of turnaround in China’s property crisis despite Beijing’s attempts to shore up demand.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index rose for 2^nd consecutive week, gained 0.82%. MAS said in the week that Singapore’s 2024 growth forecast raised to 2.4% with inflation expected lower to 3.1% by economists. The three local banks led STI index way up, DBS bank hit new record high of 34.67.

Technically, STI rallied on Wed and Thur after it had a bullish breakout from its previous two-week sideway consolidation, before retreating a bit on Friday. It took off after taking off from 3150 resistance level, next major technical resistance at previous high around 3250 level, should it continue going up.

Changes to STI index stocks after Mar review: Frasers Centrepoint Trust has been added to the STI and Emperador has been removed from the index. All changes will take effect on 18 March 2024.

Top weekly gains: SingTel +4.20%; CDL +2.78%;

Top weekly losers: Emperador -20%; YZJ Ship -7.61%

STI weekly chart

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