Both China and U.S Manufacturing Picks Up for the First Time in Months

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Weekly Wrap Content for the week of Apr 5:

1. Week 14 major indexes performance;

2. Week 14 US sector indexes performance;

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

U.S.

For the week ended Apr 5, U.S. three major indexes pull back from record highs on signs of manufacturing revival. The ISM’s service and manufacturing sector data seemed to play a particular role in driving sentiment over the week. Stocks moved lower following the release of the March ISM manufacturing reading on Monday, which came in well above expectations and indicated expansion for the first time in 16 months. Refer to below major indexes monthly performance table.

Key highlights for the week and next:

1.    Labour market is in very good shape, though its best days are behind it. Latest non-farm payrolls data for Mar as reported on Friday shows that employment conditions remain healthy, total 303k new jobs added, far better than expected 200k. 

2.    The unemployment rate ticked down slightly to 3.8%, its 26th consecutive month below 4%. 

3.    Latest ISM Manufacturing Index data as reported on Monday shows March PMI was 50.3, returning to expansionary territory for the first time since late 2022.   

4.   Fed Interest Rate Decision = Jobs conditions + Inflation Trend. It’s expected Fed would not cut rates until June at the earliest. Due to strong economic data reported recently, that timetable is challenged.

SPX sectors in play

For the week, nine out of 11 sectors in the SPX closed in red. Growth stocks faring better than value shares and large-caps falling less than small-caps. Energy(XLE) stocks outperformed as oil prices reached their highest level since October on worries over rising tensions between Israel and Iran and a decision by major exporters to maintain production limits despite tight markets. Some late strength in Microsoft also boosted the technology(XLK) sector. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three indexes retreated from their record level.  to their monthly new records. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China equities advanced in a holiday-shortened week, as data added to evidence that the economy could be gaining traction. The Shanghai Composite Index(SSE) added 0.92%, while the blue chip CSI 300 gained 0.86%. In Hong Kong, the benchmark Hang Seng Index rose 1.10%. Markets in mainland China were closed on Thursday and Friday in observance of the Qingming Festival, also known as Tomb Sweeping Day, when Chinese people honor their ancestors by cleaning and placing offerings on their tombs. Hong Kong markets were closed on Thursday but reopened on Friday. (Refer to the above weekly performance table).

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

1.    Manufacturing activity expands for first time in six months. The official manufacturing PMI rose to an above-consensus 50.8 in March, up from 49.1 in February. The nonmanufacturing PMI grew to a better-than-expected 53.0 from 51.4 in February. Separately, the private Caixin/S&P Global survey of manufacturing activity edged up to 52.7 in March, in line with expectations and marking its 15th month of expansion. 

2.    The People’s Bank of China said in its first-quarter policy report that it will intensify existing measures to encourage demand. The central bank pledged to maintain ample social financing and money supply to support Beijing’s annual growth target of 5% as it grapples with weak consumer confidence. 

3.    The value of new home sales by the country’s top 100 developers slumped 49% in March from the prior-year period, easing from the 60% drop in February, according to the China Real Estate Information Corp. Sales rose 93% from the previous month, but remained weak compared with the monthly average of the third and fourth quarters of last year. China’s tumbling property sales remain a drag on the key sector for its economy and have stoked a liquidity crisis among some of its biggest property developers as they struggle to meet loan repayments.

Hang Seng Index stocks top weekly gains: TRIP(9961) +8.5%; Zijin Mining(2899) +7.4%;  

Hang Seng Index stocks top weekly losers: Alibaba Health(241) -12%; JD Health (6618) -8.6%

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index pulled back after 4-week consecutive gains, down 0.18% this week. The index has been hovering around resistance level 3250 before dropping to test its 20dma level and rebounded on Friday. Immediate support 3200 and resistance 3250.

Top weekly gains: Seatrium+6.3%; MPACT +4.69%;

Top weekly losers: SingTel -5.14%; DFI -5.1%

STI weekly chart

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