Stocks Decline on Renewed Tariffs and Weak Economic Data

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 1, U.S. stock indexes posted losses in what ended as the worst week for some indexes since the tariff-driven sell-off in early April. The Dow Jones Industrial Average (DJI) fell 2.92%, followed by S&P 500 Index (SPX) down 2.36%. The technology-heavy Nasdaq Composite(COMP) held up best (down 2.17%) and maintained its year-to-date lead over the other major indexes.Trade deals and tariffs were a major driver of sentiment throughout the week leading up to Trump’s arbitrary August 1 deadline for new deals. Earnings headlines were another major focal point during the week. The Federal Reserve concluded its July monetary policy meeting on Wednesday and, as was widely expected, maintained its target policy rate at a range of 4.25% to 4.50%. Refer to below major indexes weekly and monthly performance for Jul.

Major indexes monthly performance for July:

Key highlights for the week and next:

1.    New tariffs. Trump signed executive order to raise tariffs on vast majority of U.S. trading partners, effective Aug 7, which appeared to weigh heavily on stock indexes Friday morning. Other announcements during the week included new deals with the European Union (EU), South Korea and India, another 90-day negotiation period extension for Mexico, as well as the progress of trade negotiations with China. 

2.    Earnings headlines. According to data from FactSet, of the 66% of SPX companies that have reported through Friday morning, 82% have beaten consensus earnings estimates, with a blended earnings growth rate of 10.3%. However, several companies warned that tariff headwinds are weighing on their businesses, including Ford Motor, which said it expects to take a USD 2 billion hit from tariffs this year. Meanwhile, shares of Microsoft and Meta Platforms both traded higher in the wake of their better-than-expected results, with both companies noting tailwinds from artificial intelligence. 

3.    Fed interest rate. The Fed concluded its July monetary policy meeting on Wednesday and, as was widely expected, maintained its target policy rate at a range of 4.25% to 4.50%. 

4.    Job reports well below consensus. Total 73k jobs added in Jul, well below consensus estimates 115k. The readings for May and June were also revised down by a total of 258k, bringing the three-month total to just 106k jobs, indicating that the labor market has cooled much more significantly than many had thought in recent months. 

SPX sectors in play

All but one the 11 SPX sectors recorded weekly losses, Utilities(XLU) was the only defensive sector stayed positive in the week. Health Care (XLV) and Consumer Discretionary(XLY) was among the worst performers. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Both the SPX and technology-heavy Nasdaq(COMP) hit new records before turning down on last two sessions of the week. Technically, it appears profit-taking possible in coming week(s) though weekly uptrend well intact for now. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland China stock markets retreated after the new U.S. tariff rates darkened the global growth outlook and a batch of data suggested a slowdown in China’s economy. The Shanghai Composite Index(SSE) declined 0.94% and the blue-chip CSI 300 lost 1.75%. In Hong Kong, the benchmark Hang Seng Index fell 3.47%. (refer to the above weekly performance table).  

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

1.    The S&P Global manufacturing purchasing managers’ index (PMI) for China fell to 49.5 in July, worse than forecast and came a day after the official PMI showed that factory activity weakened to 49.3 in July, a three-month low. The official PMI also lagged forecasts. High temperatures, heavy rain, and flooding in some regions that disrupted manufacturing were the reasons for July’s deterioration, China’s statistics bureau said in a statement accompanying Thursday’s data. 

2.    The latest PMI data suggested that China’s economy could see slower growth in the coming months amid still-weak domestic demand and global trade uncertainty. Front-loading by Chinese exporters ahead of expected U.S. tariff hikes, shipments to non-U.S. markets, and fiscal stimulus at home kept China’s economy buoyant in the year’s first half. But many economists expect that the momentum in the economy will slow as the impact of these tailwinds diminishes.

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) fell 2.52% this week, first weekly loss after five consecutive extended weekly gains. Only four out of the 30 index stocks recorded weekly gains. 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.