Rising Yield Weigh on U.S Stocks

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month 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 Oct 25, the S&P 500 index(SPX) finished lower after previous six-week winning streak. A slow creep upward for the 10-year Treasury note yield to near three-month highs appeared to weigh on equity buying interest. Large-cap stocks held up better than small-caps, and growth stocks outperformed value as the tech-heavy Nasdaq Composite Index gained slightly. Refer to below major indexes performance table for the week.

Key highlights for the week and next:

1.    Yields have moved higher since the Fed initiated its first rate cut in September and rose further this week, interrupting the stock market’s streak of gains. Bonds price keeps falling for six-week streak (Bond prices and yields move in opposite directions.) 

2.    The 10-year yield climbing from around 3.8% to 4.4%, reach its highest since last December. Yields appears to be rising for the right reasons. 1) The economy remains resilient with recession probability continuing to drop, thus leading to a more gradual rate-cutting expectation than anticipated at the September Fed meeting. 2) Concerns over U.S debt and the upcoming election. 

3.    Tesla(TSLA) outperformed the broad market and “Magnificent 7”. It was the best performer in the S&P 500 and led the Magnificent Seven, helping to keep the broad index from a steeper decline. TSLA surged 22% after its earning report, recorded its best daily gain in more than 11 years. 

4.    Upcoming two weeks important earnings and events 

SPX sectors in play

Only one out of the 11 SPX sectors posted weekly gain. Consumer Discretionary ( XLY) was the only gainer. Technology (XLK) and other large-cap techs performed relatively better. Tesla posted unexpectedly strong quarterly earnings and projected 20% to 30% vehicle sales growth in 2025. The quarterly results and bright outlook drove the stock to its best daily gain (22%) in more than 11 years on Thursday. Materials (XLB) shares lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Dow and SPX closed lower but the tech-heavy Nasdaq(COMP) index edged up higher after setting a new all-time intra-week high. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks rose as the central bank implemented more stimulus measures to shore up the economy. The Shanghai Composite Index(SSE) added 1.17%, while the blue chip CSI 300 gained 0.79%. In Hong Kong, the benchmark Hang Seng Index fell 1.03%. (Refer to the above weekly performance table).

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

1.    The People’s Bank of China (PBOC) injected RMB 700 billion into the banking system and left the lending rate unchanged at 2%, as expected. With RMB 789 billion in loans set to expire next month, the operation resulted in a net withdrawal of RMB 89 billion from the banking system for October. 

2.    Separately, Chinese banks lowered their one- and five-year loan prime rates by 25 basis points to 3.1% and 3.6%, respectively, making it cheaper for consumers to take out mortgages and other loans. The rate cuts were in line with a broad stimulus package unveiled by the PBOC in late September aimed at reviving China’s economy. The central bank also signaled additional easing measures in the near term, including another potential cut to the reserve requirement ratio, depending on liquidity conditions. The PBOC last cut the reserve requirement ratio by 50 basis points on September 27. 

3.    China's youth unemployment rate eased in September from a record high the prior month. The jobless rate for 16- to 24-year-olds, excluding students, came in at 17.6% in September, down from 18.8% in August, according to official data.

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

SSE weekly chart

.HSI weekly chart

Singapore

STI index (STI) settled the week at 3593.41 close, fell 1.29% for the week. The index retreated from its sideway consolidation range top, after cycled up previous week, the sideways has now into its 6^th week. 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.

SPX Hit New Highs Again, Six-week Win Streak

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Main Content:

1.    Major indexes weekly performanc 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month 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 Oct 18, all the three major indexes closed with gains this week, extending weekly win streak to six. SPX hit a new record finish Friday on fresh tailwinds from surging company results. The tech-heavy Nasdaq Composite(COMP) outpaced other indexes thanks partly to a double-digit rally in Netflix (NFLX) following its robust earnings. Average earnings per share (EPS) are exceeding Wall Street's expectations, up more than 6.7% for the 15% of S&P 500 companies reporting third quarter results so far. Refer to below major indexes performance table for the the week.

Key highlights for the week and next:

1.   Retail sales increased 0.4% last month, accelerating from the 0.1% uptick registered in August. The September reading was slightly above the consensus estimate for a 0.3% gain. 

2.    Initial jobless claims decreased fell unexpectedly to 241k during the week ended October 12, a decline of about 19k filings. 

3.    According to the CME FedWatch Tool, there is a 91% chance rates will fall 25 basis points at the FOMC meeting on November 6–7. There's a 9% chance of no change from current rates. 

SPX sectors in play

Nine out of the 11 SPX sectors closed with gains for the week, led by the utilities(XLU) and real estate(XLRE) sectors. Energy(XLE) stocks pulled back in sympathy with oil prices, which retreated as fears of possible Israeli attacks on Iran’s oil and gas infrastructure subsided. Strong quarterly results from Taiwan Semiconductor Manufacturing(TSM), appeared to reignite excitement for artificial intelligence (AI)-related stocks that are in the Nasdaq. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three major indexes closed up for the week, hit weekly win streak to six. Uptrend appears strong, the lagging Nasdaq index rebounded up to near its best level at 18671 hit three months ago.

Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks rose as the central bank unveiled more support measures after data showed that deflationary pressures grew more entrenched in the economy. The Shanghai Composite Index(SSE) added 1.36%, while the blue chip CSI 300 gained 0.98%. In Hong Kong, the benchmark Hang Seng Index fell 2.11%. (Refer to the above weekly performance table).

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

1.    China’s economy in the Q3 expanded 4.6% from year-ago levels, beating a consensus estimate. This growth rate was slightly lower than the 4.7% expansion recorded in the second quarter and below the government’s stated target of “around 5%.” On a quarter-over-quarter basis, the economy grew 0.9%. 

2.    Other economic data showed signs of improvement. Industrial production rose a better-than-expected 5.4% in September from a year earlier, up from August’s 4.5% increase. Retail sales grew an above-forecast 3.2% year over year, an acceleration from the 2.1% increase logged in August. Higher sales of household appliances were a contributing factor. 

3.   Inflation. Annual inflation came in at a below-consensus 0.4% in September, the lowest level in three months and a slowdown from the 0.6% rate recorded in August. Core inflation, which strips out volatile food and energy costs, increased 0.1%, the lowest since February 2021, according to Bloomberg. The producer price index fell a bigger-than-expected 2.8% from a year ago, deepening from August’s 1.8% drop.

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

SSE weekly chart

.HSI weekly chart

Singapore

STI index (STI) closed at 3640.19, added 1.86% for the week. The index cycled up to its five-week sideway consolidation top line, closed near its best level 3652. The three local banks and SingTel led the gains this week. Overall uptrend is strong. 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.

SPX Hit New Highs on Solid Bank Earnings. Possible China Stimulus Ahead.

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month 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 Oct 11, both the S&P 500 Index (SPX) and Dow Jones Industrial Average(DJI) moved to record highs, helped by some upside surprises to kick off earnings season. Shares in JPMorgan Chase(JPM) and Wells Fargo(WFC) rose on Friday after the banking giants reported smaller-than-feared declines in third-quarter profits, while the former managed a small increase in revenues. Refer to below major indexes performance table for the the week.

Key highlights for the week and next:

1.    Inflation modestly higher than expected. As reported on Thursday, both headline and core inflation in September a tick above expectation, which rose by 0.2% and 0.3% respectively. On a year-over-year basis, core prices increased 3.3% in September versus 3.2% in August, marking the first increase since March 2023. 

2.    While September inflation came in slightly hotter than expected, it's unlikely to stop the Fed from continuing its easing campaign, as it has now shifted its focus from inflation to the labor market. It’s expected quarter-point rate cuts at each meeting until Fed policy settles around 3% - 3.5%. 

3.    The CME FedWatch Tool shows a decent (14.1%) chance of the Fed keeping rates steady for the Fed’s next policy meeting in November. Minutes from the Fed’s last policy meeting released Wednesday, also revealed that several members preferred only a 25-basis-point (0.25 percentage points) rate cut. 

4.    The Q3 earnings season kicked off on Friday, with some of the big U.S. banks reporting better-than-expected results. Consensus expects earnings for the quarter to grow 4.2%, the fifth consecutive quarter of growth. A key trend to watch is whether an expected slowdown in earnings of the Magnificent 7 group of stocks coincides with a pickup in earnings growth from the rest of the market, or the S&P 493. 

SPX sectors in play

Six out of the 11 SPX sectors closed with gains for the week. Technology (XLK) outperformed, as a solid gain in NVIDIA(NVDA) shares compensate for a decline in Google parent Alphabet(GOOGL), following reports of a possible breakup of the company. Tesla was also weak following a skeptical response to the company’s highly anticipated unveiling of its new “robotaxis” and “robovans.” Utilities(XLU) shares lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three major indexes closed up for the week with each added more than 1%. Both the SPX and DJI closed at record new highs. Going forward, elevated valuations, geopolitical risks in the Middle East, and a tight U.S. presidential election could act as catalysts for short-term volatility.

Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks fell over a holiday-shortened week as optimism about Beijing’s stimulus measures waned. The Shanghai Composite Index(SSE) lost 3.56%, while the blue chip CSI 300 gave up 3.25%. In Hong Kong, the benchmark Hang Seng Index fell 6.53%. (Refer to the above weekly performance table).

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

1.    The National Development and Reform Commission(NDRC), the country’s economic planning agency, announced at a press conference on Tuesday that China would speed up countercyclical measures to support growth. The speech largely reiterated plans to boost investment and increase direct support to low-income groups and new graduates. Officials also stated that the central government will continue issuing ultra-long special sovereign bonds in 2025 to fund major projects and invest RMB 100 billion in strategic areas. 

2.    The People’s Bank of China launched a RMB 500 billion swap facility to provide liquidity to institutional investors to buy stocks, Bloomberg reported. Under the mechanism, the central bank will accept applications from nonbank financial institutions such as securities firms, funds, and insurers to obtain highly liquid assets, such as government bonds and central bank bills, if they provide certain collateral. The facility was part of a sweeping stimulus package announced by the central bank in late September that included interest rate cuts and other measures aimed at jumpstarting China’s economy. 

3.    Spending by Chinese consumers over the long holiday that ended Monday lagged pre-pandemic levels, Bloomberg reported, citing official data. Passenger traffic rose by 5.9%, while spending increased by 6.3% year on year. Box office sales totaled RMB 2.1 billion, down from RMB 2.7 billion reported a year earlier. However, average daily spending per trip was approximately RMB 131, up from RMB 113 during the five-day Labor Day holiday in May. 

4.    The highly anticipated briefing by China’s Ministry of Finance has wrapped up on Saturday Oct 13 - alas with no specific pledge of the 2 trillion yuan ($283 billion) in fresh economic stimulus that investors were hoping for in the lead up to the event. However, Policymakers offered clearer guidance on the focus of fiscal policy, vowing new measures to support the beleaguered property sector and to relieve the debt burden of local officials. Investors are turning their attention to the next meeting in the coming weeks of China’s top legislature, the National People’s Congress(NPC) Standing Committee, which has the power to approve more government bond sales. Investors and analysts expect China to deploy as much as 2 trillion yuan in fresh fiscal stimulus in order to shore up growth and boost confidence, a flash survey by Bloomberg shows.

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

SSE weekly chart

.HSI weekly chart

Singapore

STI index (STI) closed with a modest decline of 0.43% for the week. The index has been in sideways trading in the range of 3544- 3653 level over the past four weeks, while it hit new record of 3652.62 during this period. There were only five stock closed up among its 30 component stocks(refer to below STI index stock weekly return table). Overall, the index still in uptrend but in sideway consolidation mode right now, the healthy breather is essential for a bull market to continue.

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.

Oil Prices Rise on Escalating Middle East Tensions

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.   S&P 500 sector index weekly/month 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 Oct 4, U.S three major indexes closed higher for the volatile week, thanks to a monster Sep jobs growth data released on Friday, though the same data sent odds of a 50-basis point rate cut next month to zero in futures trading.

After a strong three quarters of the year, with the S&P 500 up over 19%, stock markets began the fourth quarter on a volatile note. This was in large part because of elevated uncertainty around four key areas: The U.S. labor market, port strikes on the East Coast, tensions in the Middle East, and the looming U.S. presidential election. Refer to below major indexes performance table for the month and the week.

Major indexes monthly performance for September

Key highlights for the week and next:

1.    U.S. labor market was perhaps the biggest upside surprise for the markets in the week. The U.S. nonfarm-jobs report for September on Friday indicated that not only did jobs added well-exceed expectations, coming in at 254k versus forecasts of 150k, the unemployment rate also ticked lower, from 4.2% to 4.1%. Last month's total jobs added was also revised higher, from 142k to 159k. 

2.    Strong labour report impact on Fed rate cut: After the labor-report data was released, markets immediately reacted, pushing Treasury bond yields sharply higher and pricing in rate cuts of 0.25% rather than 0.5% for either the November or December meeting this year. Overall, we continue to see the Fed gradually bringing interest rates down toward the 3.0% - 3.5% range through next year, which should be supportive of both consumer and corporate spending. 

3.    Geopolitical tensions also escalated in the Middle East early this week, as Israel faced an Iranian missile strike and deliberated retaliation. From a market perspective, the immediate response to the escalation was a rise in oil and commodity prices, as well as sharp move higher in the VIX volatility index. However, safe-heavy assets such as gold and Treasury bonds have largely reversed to moving back lower. 

4.    Inflation data ahead coming Friday on Oct 11.

 

SPX sectors in play

Six out of the 11 SPX sectors closed with gains for the week. Energy(XLE) and Financials(XLF) stocks outperformed, while Materials(XLB) and Consumer Staplers(XLP) stocks lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The three major indexes had a strong rally after a surprising Sep jobs data released before market open on Friday, the indexes since recovered all their losses earlier in the week and closed positive for the week. Sentiment turned bullish and bulls are still in charge by now. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

 

China/HK

China stocks surged in a holiday-shortened week as optimism about Beijing’s comprehensive support measures offset disappointing data. The Shanghai Composite Index(SSE) gained 8.06% and the blue chip CSI 300 added 8.48%. In Hong Kong, the benchmark Hang Seng Index rallied 10.2%. (Refer to the above weekly performance table). Markets in mainland China were closed on Tuesday for the National Day holiday and will reopen on Tuesday, October 8. Hong Kong markets were closed Tuesday but reopened Wednesday.

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

1.    China’s factory activity contracted for the fifth consecutive month amid weak demand. The official manufacturing Purchasing Managers’ Index (PMI) rose to an above-consensus 49.8 in September from 49.1 in August, according to the country’s statistics office but remained below the 50-mark threshold separating growth from contraction. The manufacturing PMI has now been in contraction for all but three months since April 2023, according to Bloomberg. The nonmanufacturing PMI, which measures construction and services activity, fell to a lower-than-expected 50 in September, its lowest level in 21 months. 

2.    Separately, the private Caixin/S&P Global survey of manufacturing activity eased to 49.3 in September from the prior month’s 50.4, its lowest reading since July 2023 and below economists’ forecasts. The Caixin services PMI fell to 50.3 from 51.6 in August but remained in expansion. 

3.    The value of new home sales by the country’s top 100 developers fell 37.7% in September from a year ago, accelerating from August’s 26.8% drop, according to the China Real Estate Information Corp. However, market sentiment improved after three of China’s largest cities relaxed homebuying restrictions on the back of the central government’s extensive stimulus package unveiled the prior week. On Sunday, Guangzhou became the first so-called Tier 1 city to remove all restrictions on home purchases. Shanghai, China’s financial center, and Shenzhen, the country’s tech hub, also announced reductions in minimum down-payment ratios for first and second homes in an effort to stoke demand.

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

SSE weekly chart

.HSI weekly chart

Singapore

STI index (STI) closed with a modest 0.44% increase, bringing its YTD performance to 10.77%. The index displayed a mixed performance across its component stocks, with notable divergences between top weekly gainers and losers. Seatrium was top gainer with 15% weekly gain, possible implication of crude oil price surge. The three local banks saw obvious divergence this week, DBS gained 1.17% while UOB and OCBC declined 1.12% and 1.46% respectively. 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.