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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
of Sep 6, major U.S. indexes suffered its worst weekly
drop in 18 months, as worries over an economic slowdown appeared to weigh on sentiment. Markets have taken on a clear risk-off tone
since the start of September, in part driven by the rising uncertainty in the
labor market and economic data, and in part perhaps driven by a natural pause
or period of profit-taking after a strong rally.
Overall, markets have rallied sharply for the
first eight months of the year, with the S&P 500(SPX) and technology-heavy
Nasdaq(COMP) up about 18% through August. We are now headed toward a seasonally
weaker period of September and October, followed by U.S. elections on Nov. 5.
Given the uncertainty in the economic data (as well as political uncertainty),
combined with the strong rally earlier this year, we could expect some form of
a market pause or correction in the weeks ahead. Refer to below major indexes
weekly performance table.
1. Recent labor market data has been weakening- although it’s still not recessionary. Friday’s official payrolls report showed there were 142k jobs added in August, below consensus estimates of around 160k, while July’s gain was revised down to 89k, marking the lowest level since December 2020. The household survey revealed that the unemployment rate had ticked lower, however, from 4.3% to 4.2%. Average hourly earnings also rose 0.4%, better than expected.
2. The Fed will begin its rate-cutting cycle in September, and may prep the markets for larger cuts to come. It’s expected the Fed will likely cut rates by 0.25% at the September 18 FOMC meeting, bringing the fed funds rate to 5.0% – 5.25%. If market conditions deteriorate substantially between now and the Fed meeting, a 0.50% rate cut may become more likely.
3. Treasury yields move lower, while yield curve un-inverts: More recently, Treasury yields across the board move lower, in response to weaker labor market data as well as the potential for Fed rate cuts. Notably, the yield curve (10-year Treasury yield minus 2-year Treasury yield) has turned positive in recent days after remaining in negative territory since mid-2022. This un-inversion of the yield curve, however, tends to occur as the Fed is poised to cut rates and when the economy is softening.
4. Crude oil prices hit new lows of the year: The S&P Global Commodity index has also hit new lows of the year, driven in part by WTI crude oil prices, which are now around $68 per barrel. The sell-off in oil and commodities also reflects the fears of a demand slowdown globally, particularly in the Chinese market, which has been plagued with weakening consumer and economic growth.
SPX
sectors in play
Eight
out of 11 SPX sectors closed with gains for the week. Stock markets rotate
defensively: Thus far for September, we have already seen about a 4% pullback
in the SPX. Technology(XLK) shares led the declines, driven in part by a drop
in NVIDIA following rumors that it may be the subject of a Justice Department
antitrust investigation, which led to a roughly USD 300 billion drop in the
chip giant’s market capitalization. Energy(XLE) shares were also especially
weak on the back of a decline in oil prices. Conversely, the typically
defensive utilities(XLU), consumer staples(XLP), and real estate sectors(XLRE)
held up better. Refer to below SPX sectors ETF weekly performance table.
Dow(DJI) and SPX closed 1st weekly down while
Nasdaq(COMP) index recorded 2nd weekly loss. The tech-dominated COMP
index formed a lower high on its chart clearly which indicates a much weaker
performance. Both DJI and SPX indexes still above their 50 weekly MA while
Nasdaq(COMP) closed below it decisively. Click below three indexes for their
weekly charts.
China/HK
China stocks retreated as investors digested weak corporate
earnings and economic data. The Shanghai Composite Index(SSE) declined 2.69% and
the blue chip CSI 300 lost 2.71%. In Hong Kong, the benchmark Hang Seng Index gave
up 3.03%. (Refer to the above weekly performance table).
Key highlights for the week and outlook
for China/HK:
1. China’s official manufacturing purchasing managers’ index (PMI) slipped to a lower-than-expected 49.1 in August from 49.4 in July as production and new order declines deepened, the National Bureau of Statistics reported. The gauge has hovered below the 50-mark threshold, separating growth from contraction for all but three months since April 2023, according to Bloomberg. The nonmanufacturing PMI, which measures construction and services activity, edged up to an above-consensus 50.3 in August from July’s 50.2.
2. Separately, the private Caixin/S&P Global survey of manufacturing activity, which polls smaller, export-oriented firms, expanded to a better-than-expected 50.4 from July’s 49.8 as new orders returned to growth. The Caixin services PMI fell to 51.6 from July’s 52.1 reading, missing economists’ forecasts, as softer new work inflows and higher input costs contributed to lower staffing levels. The mixed PMI readings highlighted the uneven performance of China’s economy as a housing market slump—now in its fourth year—and rising trade tensions have weighed on the growth outlook.
3. New home sales extend declines. The value of new home sales by the country’s top 100 developers fell 26.8% in August year on year, accelerating from a 19.7% drop in July, according to the China Real Estate Information Corp.
Click below SSE and .HSI indexes for their weekly charts.
Singapore
STI index recorded 4th consecutive weekly gains, with 0.34%
up. S-Reits led market gainers as investors expect U.S interest-rate cut is
finally just around the corner. Refer to below index stocks weekly performance.
Click below for STI weekly chart.
Source: Some
contents and data excerpted from various public market reports.
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