Stocks Hit New Records as Consumer Prices Fall to Three-Year Low

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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 Jul 12, major U.S. indexes hit record highs in the first notable broad advance since mid-April. The DJI, SPX and technology-heavy Nasdaq Composed moved to record intraday highs, but the biggest advance was notched by the small-cap Russell 2000 Index, which gained 6.00%, marking its best week since early November. Q2 earning season started on Friday, investors also waiting for the arrival of major earnings reports. Refer to below major indexes weekly performance table.

Key highlights for the week and next:

1.    U.S consumer price index (CPI) inflation at 3.0% on a year-over-year basis in June, the lowest reading since March 2021. Headline prices fell 0.1% in June, marking the first decline since soon after the start of pandemic lockdowns in May 2020. 

2.    Earnings season unofficially started on Friday, with Q2 earnings releases from JPMorgan Chase(JPM), Wells Fargo(WFC), and Citigroup(C). SPX Q2 earnings YoY is estimated to be 8.8%, which would be the fastest pace since Q1 of 2022. 

3.    Interest rate cuts. There's virtually no chance of a July rate cut, according to the CME FedWatch Tool, but investors place odds at 94% that rates will fall 25 basis points by the September Federal Open Market Committee (FOMC) meeting. The market expects two or three rate cuts by the end of the year. 

SPX sectors in play

10 out of the 11 sectors of SPX closed with gains for the week. Rates sensitive sectors such as Real Estate (XLRE) and Materials (XLB) were among top performers. Communication Services (XLC) was the only sector closed in red. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All three major indexes hit record highs this week. Small companies index Russell 2000 performed the best with 6% weekly gains, new high since Jan 2022. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks gained as strong export data offset concerns about deflationary pressures. The Shanghai Composite Index(SSE) rose 0.72% and the blue chip CSI 300 registered modest losses for the week, SSE was down 0.59%, while CSI 300 added 1.2%. In Hong Kong, the benchmark Hang Seng Index gained 2.77%. (Refer to the above weekly performance table).

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

1.    China’s Exports exceeded forecasts in June, rising 8.6% from a year earlier, up from 7.6% growth in May. Analysts attributed the strength in overseas demand to manufacturers frontloading shipments ahead of potential tariff hikes from several major trading partners. The overall trade surplus increased to a multi-decade high of USD 99.05 billion from USD 82.62 billion in May. 

2.    China’s consumer price index rose a lower-than-expected 0.2% in June from a year earlier, narrowing from May’s 0.3% rise. Core inflation rose 0.6%, unchanged from May. The producer price index fell 0.8% from a year ago, marking its 21st month of decline, but eased from a 1.4% drop in May.

3.    China’s economic recovery has been uneven this year despite numerous measures to spur growth as a protracted property sector slump and weak domestic demand have restrained consumer prices. Many analysts have shifted focus to the Third Plenum on July 15, a three-day meeting of the Chinese Communist Party that is expected to unveil key economic policies for the coming years.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index rally accelerated to 2.55% gain this week- 2^nd consecutive weekly gain over 2%, also its four-week up in a row. The index closed at its six-year new high since May 2018. SATS was the best index performer with 11.53% weekly gains and ThaiBev also had 10.23% gain. Rates sensitive stocks were among the top performers such as Mapletree PanAsia Com Tr(MPCT), Frasers L&C Tr(FLCT), CapitaLand Ascendas Reit(CLAR).

Click below for STI weekly chart.

STI weekly chart

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