August Ends Upbeat After a Stormy Start

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Main Content:

1.    Major indexes weekly performance 

2.    Major indexes monthly performance 

3.    U.S stocks weekly wrap 

4.    S&P 500 sector index weekly performance 

5.    China/Hong Kong stocks weekly wrap 

6.    Singapore stocks weekly wrap 

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

U.S.

For the week ended Aug 30, major U.S. indexes ended mixed in a week of light trading ahead of the holiday weekend. The technology-heavy Nasdaq Composite(COMP) fared the worst, dragged lower in part by chip giant NVIDIA(NVDA), which lost nearly 10% of its value, or roughly USD 300 billion, at the stock’s low point on Thursday. Relatedly, value stocks outperformed growth shares by the largest margin since late July. Markets will be closed on coming Monday public holiday. Refer to below major indexes weekly performance table.

As we wrapped up August, stocks have staged an impressive recovery since the near 10% correction in early August, supported by a still expanding economy, positive earnings growth, and a Fed that is ready to ease. Historically, the start of a rate-cutting cycle is positive for stocks when the economy is not in a recession. Major indexes monthly performance as below.

Key highlights for the week and next:

1.    Last week all eyes were on NVIDIA, the clear leader in AI development. Often referred to in financial media as the most important stock in the world, NVIDIA represents over 6% of the S&P 500 and has a market capitalization of $3.1 trillion, second only to Apple. Given the stock's significant influence on the index and its 150% rally this year, the company's quarterly earnings report was one the most anticipated releases of this earnings season. NVIDIA exceeded consensus estimates on second-quarter sales, earnings, and third-quarter guidance, but it did so without blowing them away to the same extent that it had in prior quarters. It did not beat the lofty expectations and dropped more than 6% after earnings. 

2.    Fed offered the clearest signal yet that rate cuts are imminent. After 16 months of rate increases and 13 months of holding rates in restrictive territory, policymakers are now prepping the ground for the first rate cut of this cycle in a couple of weeks when the Fed meets on September 18. 

3.   Inflation data: Core personal consumption expenditures (PCE) price index reading released on Friday morning showed prices rising by 0.2% in July, largely as expected, although the year-over-year increase came in a tick lower than consensus, at 2.6%. Investors seemed pleased with confirmation that inflation was remaining subdued and near the Fed’s target. 

4.   September is historically one of the worst months of the year for stocks, though past isn't precedent. A key data to focus coming week will be the Friday’s (Sep 6) August nonfarm payroll report.

 

SPX sectors in play

Eight out of 11 SPX sectors closed with gains for the week. Value stocks outperformed growth shares by the largest margin since late July. Financials(XLF) and Industrials(XLI) outperformed while Tech(XLK) and Consumer Discretionary(XLY) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Dow(DJI) closed at new record, and posted its fourth record close of the week. SPX closed at its recent high, while the Nasdaq(COMP) index appears lagging behind with about 5% below its recent high, shows some weakness. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks fell as a series of corporate earnings reports missed expectations and dampened buying sentiment. The Shanghai Composite Index(SSE) lost 0.43% and the blue chip CSI 300 fell 0.17%. In Hong Kong, the benchmark Hang Seng Index gained 2.14%. (Refer to the above weekly performance table).

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

1.    Several China economists reduced their 2024 growth forecasts as the country grapples with a prolonged property sector slump and weak domestic demand. Retail sales, a key consumption indicator, are estimated to grow 4% this year, down from estimates of 4.5% in July, according to a Bloomberg survey of economists. The weaker outlook for China raised the prospect that the country may miss its official growth target of about 5% this year. It also raised expectations that the central bank may further loosen policy in the near term, including additional interest rate cuts and a reduction of the reserve requirement ratio for domestic lenders. 

2.    The People’s Bank of China injected RMB 300 billion into the banking system via its medium-term lending facility and left the lending rate unchanged at 2.3%. The central bank also supplemented the banking system with RMB 471 billion via its short-term seven-day reverse repos and kept the lending rate at 1.7%.

ClClick below SSE and .HSI indexes for their weekly charts. 

SSE weekly chart

.HSI weekly chart

Singapore

STI index recorded 3^rd consecutive weekly gains, with 1.62% rise, largely attribute to SingTel’s 6.5% gains for the week. The index is about 2% away to reach its Jul peak at 3509 level. 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.