Market Retraced Part of “Election Rally”, Focus Returns to Inflation and Fed

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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 Nov 15, major indexes gave back some of the robust post-election gains. The S&P 500(SPX) was down about 2% for the week, although gains for the full year still exceed 23%, and the index is up over 1% since U.S. election day, as uncertainty over the incoming administration’s policies appeared to continue driving the so-called Trump Trade. Refer to below major indexes performance table for the week.

Key highlights for the week and next:

1.    Inflation. Consumer price index (CPI) inflation data for the month of October was in line with expectations, with headline prices rising 0.2% to 2.6% YoY in October and core (less food and energy) prices rising 0.3% to 3.3%. 

2.    Fed rates cut. Fed Chair Powell indicates that there is "no rush" to cut rates, as the economy is resilient. This sparked some concern in markets that the Fed may not be cutting rates as much as previously thought. The CME FedWatch Tool, expectations priced into futures markets for a quarter-point cut in December fell moderately over the week, from 64.6% to 58.4%. Expectations for a full percentage point of cuts by the end of next year fell more considerably, from 41.3% to 32.6%. 

3.    Bitcoin rally. At its peak Wednesday, the price of Bitcoin had surged by nearly a third (32.46%) since the eve of the election, as investors anticipated looser regulation of digital currencies. 

4.    EV shares pull back on report of planned end of tax credits. Reports surfaced Tesla CEO Elon Musk would co-head a planned new Department of Government Efficiency(DOGE), Tesla shares had gained 42.63% at its peak since the day before election. Tesla(TSLA) shares and other EV makers fell back late in the week, however, as Trump plans to eliminate the $7,500 consumer tax credit for EV purchasers. Rivian (RIVN), a producer of other higher-cost EVs, was particularly hard hit, falling 14.3% in the wake of the news.

 

SPX sectors in play

Three out of the 11 SPX sectors recorded weekly gain. Financials(XLF) and Energy(XLE) were the top gainers. Health care(XLV) and Tech(XLK) lagged. Health care shares fell sharply on Friday, the iShares Biotechnology ETF(IBB) declined 4.79%—following news Thursday evening that Robert F. Kennedy, Jr., would be President-elect Donald Trump’s nominee to head the Health and Human Services Department (HHS). Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three major indexes Dow, SPX and Nasdaq Composite retreated from their previous week’s record highs, overall uptrend still strong. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks declined as evidence of persistent deflation and worries about potential U.S. tariffs under incoming U.S. President Trump hurt investor confidence. The Shanghai Composite Index(SSE) fell 3.52%, while the blue chip CSI 300 gave up 3.29%. In Hong Kong, the benchmark Hang Seng Index plunged 6.28%. (Refer to the above weekly performance table).

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

1.    China’s consumer price index rose a below-consensus 0.3% in October from a year earlier, down from 0.4% in September. Core inflation increased 0.2%, from September’s 0.1% rise. The producer price index fell 2.9% year on year, more than the 2.5% decrease predicted by analysts and accelerating from September’s 2.8% drop, extending the deflation in factory gate prices that began in late 2022. 

2.    Other data painted a mixed picture of the economy. Retail sales expanded a better-than-expected 4.8% from a year ago, up from September’s 3.2% rise and marked the strongest growth since February. Industrial production rose 5.3% from a year earlier, lagging forecasts and September’s 5.4% increase, amid weaker auto sales. Fixed asset investment remained steady at 3.4% in the January to October period, while property investment in the period fell 10.3%. China’s urban unemployment rate eased to 5%, from 5.1% in September. 

3.   Property sector slump eases. New home prices in 70 cities fell 0.5% in October from September, when home prices dropped 0.7% from August. October’s decline marked the second month of slowing home price declines and the slowest pace since March, according to Bloomberg. The improvement came after Beijing unleashed in recent months a series of stimulus measures aimed at boosting the housing sector, including reducing mortgage rates, relaxing homebuying curbs in big cities, and cutting taxes on home purchases. 

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

SSE weekly chart

.HSI weekly chart

Singapore

STI index (STI) closed at new record high 3744.70 this week, led by banks and the Jardine group’s stocks gains. JMH was the top performer with 3.11% gain, while Seatrium , venture and YZJ Ship were among the top losers. 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.

Stocks Rally Following U.S Election, Hopeful for Growth and Tax Cut

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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 Nov 8, major indexes rose to record highs, as investors wagered that the Republicans’ so-called red sweep win would result in faster earnings growth, looser regulations, and lower corporate taxes. The small-cap Russell 2000 Index(Russell 2000) led the gains, surging 8.57% for the week. Meanwhile, the S&P 500 Index(SPX)’s 4.66% gain was its best in almost exactly a year. Refer to below major indexes performance table for the week.

Key highlights for the week and next:

1.    President election: The decisive U.S. election outcome cleared a source of uncertainty for the markets, with stocks posting their best ever post-election rally. 

2.    Inflation: The likelihood of tax cuts and deregulation may boost economic growth further, supporting corporate profits and the rally in stocks. But tariffs and debt concerns may push rates up and pressure bonds, acting as an offset. 

3.    Interest Rate: The Fed cut interest rates for the second time this cycle, bringing its policy rate to 4.5%-4.75% and continues to view its policy as restrictive. However, strong growth and possibly looser fiscal policy next year may lead the Fed to move more slowly, with markets starting to price in a shallower rate-cutting cycle. 

4.    Data events in focus coming week: CPI on Wednesday Nov 13, PPI on Thursday Nov 14, Retail Sales Nov 15. 

SPX sectors in play

All 11 SPX sectors recorded weekly gain. Consumer Discretionary(XLY) and Energy(XLE) outperformed while the defensive sectors Consumer Staples(XLP) and Utilities(XLU) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three major indexes Dow, SPX and Nasdaq Composite closed on record highs. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks surged as Beijing’s unveiling of fresh stimulus measures offset concerns about potential U.S. tariff hikes. The Shanghai Composite Index(SSE) gained 5.51%, while the blue chip CSI 300 added 5.5%. In Hong Kong, the benchmark Hang Seng Index was up 1.08%. (Refer to the above weekly performance table).

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

1.    China’s announced on Friday a RMB 10 trillion program to refinance local government debt, which Beijing has flagged as a key economic and financial risk for the country. Policymakers also raised the local government debt ceiling to RMB 35.52 trillion from RMB 29.52 trillion, marking the first time they raised the ceiling midyear since 2015. Finance Minister Lan Fo’an also pledged to take a “more forceful” fiscal policy in 2025 to support growth but did not provide details. 

2.    On the trade front, exports rose an above-forecast 12.7% in October from a year earlier, up sharply from 2.4% in September, marking the fastest rate of growth since July 2022. The rise was largely driven by better weather and steep discounts. Imports fell 2.3%, down from the prior month's 0.3% growth. The overall trade surplus increased to USD 95.72 billion from USD 81.71 billion in September. While the growth in October’s exports signaled strong demand for Chinese goods—which has been a bright spot for the economy—analysts cautioned that China’s export outlook has grown more uncertain given the possibility of a trade war when Trump takes office in 2025. 

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

SSE weekly chart

.HSI weekly chart

Singapore

STI index (STI) closed hit all-time record high at 3724.37 level this week, led by banks gains. The trio local banks UOB, DBS and OCBC added 11.18%, 9.42% and 5.8% respectively this week. On the other hand, the STI index S-REITs mostly closed lower. 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.

U.S. Stocks on 2nd Losing Week on Rising Yield Ahead of Nov 5 Election

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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 Nov 1, the major indexes finished mostly lower over an busy week of economic data and earnings reports. The tech-heavy Nasdaq Composite(COMP) reached intra-week record high on Wednesday before falling back sharply on Thursday. Roughly 42% of the S&P 500(SPX) companies reported Q3 earnings over the week, including  five of the so-called Magnificent Seven stocks. Refer to below major indexes performance table for the week.

All major indexes in my watchlist recorded negative return for the month of October. Refer to below monthly performance table.

Key highlights for the week and next:

1.    There were 169 SPX firms reported earnings, overall results helped lift Q3 EPS of SPX estimate to 5.1% from the previous 3.6%. Of the 70% of S&P 500 companies reporting to date, 75% have beaten analysts' EPS estimates, and 60% exceeded revenue expectations. Including five of the so-called Magnificent Seven mega-cap technology-oriented stocks: Meta and Microsoft, Google parent Alphabet, Apple, and Amazon.com. Overall earnings have been decent, with Amazon (AMZN) and Alphabet (GOOGL) results impressed the markets. 

2.    U.S. nonfarm jobs report released on Friday for the month of October showed the total new jobs came in well below expectation, with 12k jobs added versus forecasts of 100k. The average monthly jobs added this year are now about 170k, below last year’s average of 250k but still above the long-term average of 148k. The jobs added however were mainly negatively impacted by Boeing strike and Hurricanes. 

3.    U.S election and Fed meeting coming week. The U.S presidential election is on Tuesday Nov 5. The Fed meeting is also on deck for Wednesday and Thursday Nov 6 and 7. It’s expected there would be another 0.25% rate cut on track.  In fact, markets are now pricing in higher probabilities of rate cuts at both the November and December Fed meetings. 

4.   November and December in election years have tended to be positive months for markets. Historically election-related market volatility has often been buying opportunity. 

5.    October's ISM Manufacturing PMI was weak at 46.5%, its lowest level in 15 months. It was the seventh straight month of contraction for the index. Manufacturing contributes about 11% to U.S GDP while private consumption contributes about 68%. 

6.    Treasury yield hit 4-month high. The weak manufacturing and payroll reports failed to prevent the yield on the benchmark 10-year U.S. Treasury note from moving to another four-month intraday high (4.37%) on Friday, perhaps in response to expectations for an eventual renewal inflation and growth pressures. 

SPX sectors in play

Two out of the 11 SPX sectors posted weekly gain. Communication Services(XLC) and Financials(XLF) sectors closed positive, while Real Estate(XLRE) lagged. Refer to below SPX sectors ETF weekly performance table.

SPX sectors forecast earnings 2025:

Indexes technical levels

Dow and SPX closed 2^nd weekly decline, while the tech-heavy Nasdaq(COMP) index closed with 1^st weekly loss. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks retreated despite data showing a pickup in economic activity. The Shanghai Composite Index(SSE) fell 0.84%, while the blue chip CSI 300 gave up 1.68%. In Hong Kong, the benchmark Hang Seng Index lost 0.41%. (Refer to the above weekly performance table).

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

1.    China’s factory activity expanded for the first time since April amid better demand. The official manufacturing purchasing managers’ index (PMI) rose to an above-consensus 50.1 in October from 49.8 in September. The nonmanufacturing PMI, which measures construction and services activity, increased to a lower-than-expected 50.2 in October from 50 in September. The rise in services activity was partly attributed to increased spending during the country’s Golden Week holiday. Separately, the private Caixin/S&P Global survey of manufacturing activity rose to 50.3 in October from the prior month’s 49.3 amid new order growth. 

2.    In the property sector, the value of new home sales by the country’s top 100 developers rose 7.1% from a year ago after September’s 37.7% drop, marking the first year-on-year growth in 2024, according to the China Real Estate Information Corp. 

3.    Taken together, the first batch of major economic indicators after the rollout of Beijing’s broad stimulus package indicated early signs of recovery in the Chinese economy. Analysts believe stock valuations will be driven by fundamentals, and focus will switch to earnings growth if economy continue to improve. 

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

SSE weekly chart

.HSI weekly chart

Singapore

STI index (STI) settled the week at 3555.43 close, fell 1.06% for the week. The index recorded its 2^nd consecutive weekly loss and its lowest close in seven weeks. HKland was the top performer with 14% weekly gain. 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.