U.S Stocks at 1-Month High on Rate Hopes

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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 Aug 23, major U.S. indexes wrapped up with a flourish, the Dow Jones Industrial Average(DJI) and S&P 500 Index(SPX) moved back toward record highs, after Federal Reserve Chairman Jerome Powell reinforced expectations for a 25-basis-point rate cut next month.  

The gains were also broad-based, rate-sensitive small caps, EVs, and homebuilders got the most traction. Moreover, Powell appeared to leave room for the possibility that rates could be cut by 50 basis points (0.50 percentage points) instead of the usual 25 basis points (0.25 percentage points). Nvidia reports next week. Refer to below major indexes weekly performance table.

Key highlights for the week and next:

1.   Sep rate cut. During the Fed’s annual symposium in Jackson Hole, the much-anticipated speech from Fed Chair Powell on Friday, it’s expected that interest-rate cuts will commence in September. Interest-rate cuts are typically favorable for the markets. 

2.    Focus shifting from inflation to employment. With the trend of inflation continues moderate, and the economy showing a bit of fatigue recently, it’s expected the Fed’s attention will now be more balanced, with effort to support the labour market and economy playing a more prominent role in upcoming rate decisions.

SPX sectors in play

All 11 except Energy(XLE) sectors of SPX closed with gains for the week.  Rates sensitive sectors such as the Real Estate(XLRE), Materials(XLB) and Industrial(XLI) were among top gainers, rate-sensitive small caps, EVs, and homebuilders got the most traction. while Tech(XLK) and Energy(XLE) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The major indexes recorded 2^nd weekly gains. The SPX closed fully recovered its early Aug losses. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks fell as a light economic calendar and caution ahead of Fed Chair Powell’s Jackson Hole speech kept buyers on the sidelines. The Shanghai Composite Index(SSE) declined 0.87% and the blue chip CSI 300 lost 0.55%. In Hong Kong, the benchmark Hang Seng Index was up 1.04%. (Refer to the above weekly performance table).

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

1.    China’s central bank kept its benchmark lending rates unchanged, reflecting policymakers’ desire to protect profit margins for banks. The People’s Bank of China (PBOC) kept the one-year loan prime rate at 3.35% and the five-year loan prime rate (LPR), a policy rate for mortgages and other long-term loans, at 3.85%. Economists largely expected the PBOC’s decision to stay pat on both LPRs after the bank unexpectedly trimmed several key rates in July. However, many economists see room for further loosening in China this year once the Fed starts cutting rates in the U.S. 

2.    Search engine leader Baidu reported its second-quarter revenue came in lower than expected even as earnings beat analysts’ forecasts. The Beijing-based company, often described as China’s Google, said that revenue for the quarter ended June fell 0.4% to RMB 33.9 billion. 

3.   Alibaba gains as it announced to voluntarily convert its secondary listing to primary listing in HK, it will become dual primary listed on the Hong Kong Stock Exchange and the New York Stock Exchange. The move would qualify the technology behemoth to sell shares to mainland China’s 220 million stock investors possibly starting on September 9, which could attract US$12 billion in funds.

SSE weekly chart

.HSI weekly chart

Singapore

STI index recorded 2^nd consecutive weekly gains, has since fully recovered its early Aug losses. The index is trading above all its major moving averages i.e 20, 50 and 200dma, which indicate a bullish trend. Refer to below index stocks weekly performance.

Click below for STI weekly chart.

STI weekly chart

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