U.S. Stocks Stalled amid Hopes for Tariff De-escalation

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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 May 9, U.S. stocks finished modestly lower, with the S&P 500 Index(SPX) and Nasdaq Composite(COMP) declined 0.47% and 0.27%, respectively, while the Dow Jones Industrial Average fell modestly. U.S. and UK announced first new trade deal since the Trump administration’s reciprocal tariffs were unveiled on April 2, which helped fuel investors’ hopes of more deals to come. U.S. and Chinese officials are holding meeting in Switzerland over the weekend for trade discussions, potentially paving the way for broader negotiations and tariff de-escalation. Refer to below major indexes performance table for the week.

Key highlights for the week and next:

1.    The U.S. has reached a trade deal with the U.K. and agreed to trade talks with China, to be held this weekend. The economic benefit of this deal is likely limited, in our view, as the U.K. represented about 4% of U.S. exports and roughly 2% of U.S. imports in 2024, resulting in a U.S. trade surplus. Importantly, the agreement demonstrates that trade talks are progressing, and it could serve as a framework for further negotiations with other trading partners. 

2.    The Federal Reserve left the fed funds rate unchanged at 4.25% - 4.5% this week, as expected, and flagged risks of higher inflation and unemployment. 

3.    Services sector readings were mixed in April but remain in expansion. The S&P U.S. Services Purchasing Managers' Index (PMI) fell to 50.8 in April but remained above the key 50.0 mark reflecting expansion. The services sector, accounting for roughly 72% of the economy, has been slowing but remains in expansion territory. 

SPX sectors in play

Six out of the 11 SPX sectors recorded weekly gains, Industrials(XLI) and Energy(XLE) led the gains, Tech(XLK) and Consumer Discretionary(XLY) were also among the gainers. Health Care(XLV) lagged. The financial sector could benefit from less exposure to tariffs due to its domestic orientation and service focus. Health care is also less affected by tariffs, and valuations are not extended relative to history. Both sectors could also be beneficiaries of tax reform and deregulation. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The SPX index has stalled and trading sideways for the whole week, there is no clear direction this market might be going at this junction. Click below three indexes for their weekly charts and SPX monthly chart.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland China stock markets advanced in an abbreviated trading week ahead of U.S. trade talks. The Shanghai Composite Index(SSE) rose 1.92% while the blue-chip CSI 300 added 2.0%. In Hong Kong, the benchmark Hang Seng Index added 1.61%. (refer to the above weekly performance table). Markets in mainland China are closed on Monday, May 5 for the Labor Day holiday.

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

1.    Chinese stocks rallied early in the week on news that U.S. and Chinese officials would travel to Switzerland for trade talks over the weekend. An unexpected policy boost by the central bank also added to positive sentiment. On Wednesday, the People’s Bank of China (PBOC) reduced its seven-day reverse repurchase rate to 1.4% from 1.5% and cut its reserve requirement ratio by half a percentage point, a move that will release roughly RMB 1 trillion in long-term liquidity in the economy, the central bank governor said. The PBOC announced other loosening measures, including rate cuts on a range of relending tools and loans for policy banks. 

2.    The measures reflected China’s increased efforts to protect the economy after the Trump administration said it would hike tariffs on most Chinese goods to 145%. On Friday, China reported that exports to other countries rose a higher-than-expected 8.1% in April but were down from March’s 12% gain. U.S.-bound shipments sank 21% from a year ago after Washington imposed the tariff hike in early April. But exports to India, Southeast Asian countries, and the European Union soared as Chinese companies offset the U.S. sales drop with sales to other markets. 

3.    Chinese Vice Premier He Lifeng and U.S. Treasury Secretary Scott Bessent are leading the trade talks, which are set to start on Saturday in Geneva and last for two days. Economists believe that U.S. tariffs in their current state would likely deliver a shock to Chinese exports and economic confidence. However, they also believe that Beijing should have the financial capacity to reduce their impact through fiscal stimulus, which the central government could roll out in stages as it assesses the economic toll of the tariffs. 

Refer to below .HSI stocks top 40 performance of the week.

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

SSE weekly chart

.HSI weekly chart

Singapore

The Straits Times Index (STI) added 0.81% to close at 3876.16 point this week, making its 4^th consecutive weekly gains. Top weekly gainers including DFI, ST Engineering, SingTel and DBS. Refer to below table for STI index stocks weekly performance. Singapore market will be closed on Monday, May 12 for Vesak Day public holiday and will resume trading on Tuesday.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports. Please comment to claim copyright ownership of any material, and I will remove it if necessary.