Stocks Climb to Record Highs on Trade Deal News

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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 Jul 25, The S&P 500 Index(SPX) and Nasdaq Composite Index (COMP) climbed to record highs for 2^nd consecutive week. The Dow Jones Industrial Average(DJI) rose 1.26%. Value stocks outpaced growth stocks throughout most of the week.

Stocks were supported by headlines around several new trade deals during the week, including announcements that the U.S. had reached agreements with Japan, Indonesia, and the Philippines. Reports that the U.S. and European Union (EU) are progressing toward a deal ahead of August 1—which Trump has set as the deadline to impose 30% tariffs on European goods—also appeared to boost sentiment during the week.

Corporate earnings reported in the week from two of the Magnificent 7 stocks, including Google parent company Alphabet and Tesla had mixed responses. Alphabet added 4.39% while TSLA dropped 4.12% for the week. Refer to below major indexes weekly performance tables.

Key highlights for the week and next:

1.    Q2 Earnings. With SPX forward PE ratio rising to over 22 times, the highest since 2021. Now it’s the earnings’ turn to drive further gains. The coming week of 28 Jul will be the busiest of this earnings season, with almost 40% of the SPX companies reporting results, including many among the Magnificent 7(Microsoft, Meta, Apple and Amzon). 

2.    U.S. flash PMI data for Jul as reported in the week shows services PMI rising to 55.2 from 52.9 in June, meanwhile, the manufacturing PMI dropped from 52.9 in June to 49.5 in Jul. 

3.    Trade Deals from risk to relief. Tariffs and trade have been the biggest source of uncertainty this year, triggering a near-20% decline in stocks in April. But this fog is gradually clearing as more trade deals are announced ahead the U.S. government's August 1 deadline. Last week's deal with Japan reduced threatened tariffs from 25% to 15% and included a $550 billion U.S. investment commitment. The deal likely provides a framework for other major countries as negotiations kick into high gear. 

4.    Fed rate cuts. Given the resilient economic data and upside risks to inflation, the Fed is likely to hold rates steady again when it meets this week Jul 29-30. But if clarity on the tariffs improves after August 1, a September cut is possible, with Powell potentially hinting at that at the Fed's annual Jackson Hole meeting on August 21-23. Market expects one to two cuts in the second half of 2025 now.

 

SPX sectors in play

All the 11 SPX sectors recorded weekly gains, Health Care (XLV) was the top gainer while Tech(XLK) and Consumer Staples (XLP) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Both the SPX and technology-heavy Nasdaq(COMP) making fresh record highs for 2^nd consecutive week. The DJI index is hovering at its record level. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland China stock markets rose on hopes for an extension of a tariff truce with the U.S. ahead of another round of trade talks between both countries. The Shanghai Composite Index(SSE) added 1.67% and the blue-chip CSI 300 gained 1.69%. In Hong Kong, the benchmark Hang Seng Index advanced 2.27%. (refer to the above weekly performance table).  U.S. Treasury Secretary Scott Bessent plans to meet with Chinese officials in Stockholm, Sweden, this week for a third round of talks aimed extending the current trade deal, which expires in August.

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

1.    The Stockholm meeting between U.S. and China follows discussions in Geneva in May that produced a 90-day pause in tariffs and a second round in London in June that led to each country lifting export controls. News of the Stockholm talks raised hopes for a continued stabilization in U.S.-China relations after both countries had appeared on track for decoupling when the Trump administration imposed 145% tariffs on China in April. 

Refer to below .HSI stocks 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 a further 1.71% gains this week to its 5^th consecutive weekly gains. Remarkable. JP Morgan is expected STI could reach 5000 points this year. They raise their rating for the real-estate sector to overweight from neutral, citing lower rates. They name City Developments and CapitaLand Integrated Commercial Trust as their top picks. Meanwhile, JP Morgan lowers its rating on industrials to neutral from overweight, noting that it's selective on the stocks due to their strong year-to-date performance.

Refer to below table for STI index stocks weekly performance.

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.