Fed: A Rate Cut in September Possible

Join SgTraderClub Facebook group HERE for daily stocks and market updates, and more.

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 Aug 22, U.S. stock rallied sharply on Friday after Fed Chair Jerome Powell's speech at the Jackson Hole symposium, bringing the S&P 500(SPX) to a modest gain for the week. Large-cap value stocks outperformed their growth counterparts, which lost ground. The tech-heavy Nasdaq Composite (COMP) finished the week lower, likely reflecting profit taking amid reemerging concerns about the sustainability of massive spending on infrastructure related to artificial intelligence. Refer to below major indexes weekly performance.

Key highlights for the week and next:

1.    Fed rate cut. At the Fed's annual Jackson Hole symposium on Friday, Fed Chair Powell signaled that incoming data may warrant a shift in the Federal Reserve's current policy rate. Markets overall appeared to welcome the signal that interest rates could be heading lower. The probability of a rate cut at the September FOMC meeting rose from about 75% to about 89%. According to CME FedWatch, markets are now pricing in two rate cuts this year, in September and December 

2.    Retail earnings point to a resilient consumer. In the week, large retailers like Walmart and Target reported earnings results that exceeded analyst expectations, despite uncertainty around tariffs and concerns that consumers may slow spending. Last month, online retail leader Amazon also saw strong 11% growth in its North American retail sales segment for the second quarter. In addition, home-improvement giants Home Depot and Lowe's reported that consumers continue to spend on small-scale home-improvement projects. 

3.    The S&P Global U.S. Purchasing Managers Index (PMI) indicated that business activity in August grew at the fastest pace so far this year. The composite PMI, which covers the services and manufacturing sectors, surprised to the upside at 55.4. It also marked the 31st consecutive month where the composite PMI came in above 50, the level that demarcates an expansion. 

4.    Jobless claims come in higher than expected. New applications for unemployment benefits increased to 235k in the week ended August 16, an uptick of 11k relative to the preceding seven-day period. 

SPX sectors in play

Nine out of the 11 SPX sectors recorded weekly gains, the energy(XLE), real estate(XLRE), financials(XLF), and materials(XLB) sectors posted the biggest gains. Large-cap value stocks outperformed their growth counterparts, which lost ground. Communication Services(XLC) and Tech(XLK) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Dow Jones Industrial Average( DJI) index had bullish breakout and hit record highs. While SPX and Nasdaq (COMP) both were largely traded within its two-week range and closed near record highs. All three indexes remain on uptrend. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland China stock markets advanced as a recent stabilization in U.S.-China trade ties spurred risk-on sentiment. The Shanghai Composite Index(SSE) advanced 3.49% and the blue-chip CSI 300 rose 4.18%. In Hong Kong, the benchmark Hang Seng Index edged up 0.27%. (refer to the above weekly performance table).  

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

Retail investors have driven the Chinese stock market’s recent rally as cash-rich households seek better returns amid low interest rates and a lack of compelling investment options in China. The amount of margin debt taken out to buy stocks climbed to its highest level since 2015 the prior week, according to Bloomberg, and is roughly 10% away from hitting a record high.

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 0.53% to close at 4253.02 for the week, the index has continues its sideway consolidation within five-week range. 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.