Fed Signals One Rate Cut in 2024, Stocks Continue Narrow Advance

Join SgTraderClub Facebook group HERE for daily stocks and market updates, and more.

Main Content:

1.   Major indexes weekly performance 

2.   U.S stocks weekly wrap 

3.   S&P 500 sector index weekly performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week ended Jun 14, the three U.S major indexes ended mostly higher, with the S&P 500 Index(SPX) and Nasdaq Composite(COMP) touching new highs. The market’s advance remained exceptionally narrow for the second consecutive week. AI related stocks appeared to provide a continuing tailwind to technology-related stocks and growth shares. Refer to below major indexes weekly performance table.

Key highlights for the week and next:

1.    The June FOMC meeting and U.S. inflation data were front and center for the week, with both offering some positive news for the bulls. 

2.   As expected, the Federal Reserve also kept rates on hold at its June meeting at 5.25% - 5.5%. The Fed's updated set of estimates pointed to one rate cut in 2024, down from the three rate cuts forecast at its March meeting. 

3.    Inflation data came in lower than expected, with headline CPI inflation for May coming in at 3.3% year-over-year, below forecasts and last month's 3.4%. Core inflation, excluding food and energy, was 3.4% in May, below forecasts of 3.5% and last month's 3.6%. After a string of hotter U.S. inflation readings for the first three months of the year, last week's reading was welcome news for markets. 

SPX sectors in play

Only three out of the 11 sectors of SPX closed with gains. Growth stocks outpaced value. Technology( XLK) and Consumer Discretionary(XLY) outperformed while Energy(XLE) and Financials(XLF) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Both SPX and COMP hit new record highs this week. Google parent Alphabet (GOOGL) and Nvidia (NVDA) helped the COMP index edge to an all-time high for the fifth consecutive day after previous week pull back. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks fell in a holiday-shortened week as data showed that deflationary pressures continued to weigh on the economy. The Shanghai Composite Index(SSE) declined 0.61%, while the blue chip CSI 300 gave up 0.91%. In Hong Kong, the benchmark Hang Seng Index was down 2.31%. (Refer to the above weekly performance table). Markets in China were closed Monday for the Dragon Boat Festival.

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

1.    China’s consumer price index rose a below-expected 0.3% in May from a year earlier, unchanged from April’s rise. Core inflation, which strips out volatile food and energy costs, rose 0.6%, slowing from April’s 0.7% increase. The producer price index fell 1.4% from a year ago, its 20th month of decline, but eased from a 2.5% drop in April. Weak consumer confidence and a protracted property sector slump have kept a lid on prices in China despite numerous measures from Beijing to prop up the economy and markets over the past year. 

2.   Data from the Dragon Boat Festival highlighted the consumer caution in China. Tourism revenue over the three-day holiday rose 8.1% from the 2023 break but lagged pre-pandemic levels, according to Ministry of Culture and Tourism data. Domestic traffic rose 6.3% from last year. However, average spending per traveler fell 12.3% from 2019, Bloomberg reported, citing Citigroup research. Some analysts predict that the government will continue rolling out support to stoke demand as weak consumer sentiment remains a drag on the economy.

Hang Seng Index component stocks weekly return:

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index was down for 2^nd week, lost 1%, after it hit major technical resistance(refer to STI weekly chart below). However, it appears to be a healthy pull-back while it still trading well above its major moving averages 20/50 and 200 weekly MA. Immediate resistance level is around 3400, immediate technical support 3250 level.

STI Index component stocks weekly return:

STI weekly chart

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