Stocks Fell on Hawkish Fed on Interest Rate Cut

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 Sep 26, major U.S. stock indexes finished the week lower, driven in part by some hawkish commentary from Fed that seemed to dampen investor optimism around the pace of further interest rate cuts. The Nasdaq Composite(COMP) fared worst, falling 0.65%, followed by the Russell 2000 Index(RUT), which registered its first weekly loss since early August. The S&P 500 Index(SPX) also fell, while the Dow Jones Industrial Average(DJI) was little changed. Refer to below major indexes weekly performance.

Key highlights for the week and next:

1.    U.S. economic growth exceeding expectations, driven by solid consumer spending. Final estimate of Q2 GDP was revised higher to 3.8% annualized, beating forecast of 3.3%. August Personal income rose by 0.4%, above forecasts of 0.3%. Data continues to point to Q3 GDP may grow above 3.0%. 

2.    Inflation in line with forecasts, latest PCE(personal consumption expenditure) inflation data released for August was 2.7%(headline inflation) and 2.9%(core inflation) both below estimation. 

3.    Negative sentiment during the week was partially attributed to comments from several Fed officials that appeared to signal a more tempered approach to further monetary policy easing than investors were hoping for. Speaking Tuesday, Fed Chair Jerome Powell noted that the economy is in a “challenging situation” due to near-term upside inflation risks and downside labor market risks while also acknowledging that “equity prices are fairly highly valued.” 

4.    Risk to note. Market has run up pretty far, pretty fast. Since April lows, the SPX is up over 30%, without a 2% or more pullback. U.S. government shutdown likely beginning on Oct 1. 

5.    U.S. Manufacturing PMI reading for Sep was 52.0, down from Aug’s reading of 53.0 but slightly better than estimates of 51.9. The services PMI registered reading of 53.9 in line with expectations. 

SPX sectors in play

Three out of the 11 SPX sectors recorded weekly gains. Energy(XLE) rallied, advancing alongside oil prices in response to President Donald Trump’s call for European Union nations to end purchases of Russian oil and gas. Most other sectors declined. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three major indexes had pullback this week.  Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland China stock markets recorded a weekly gain. The Shanghai Composite Index(SSE) added 0.21% and the blue-chip CSI 300 advanced 1.07%. In Hong Kong, the benchmark Hang Seng Index fell 1.57%. (refer to the above weekly performance table).  

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

No major economic indicators or corporate earnings were released during the week, giving traders little news to act on. Rather, a high level of domestic liquidity has fueled strong gains in China’s stock markets since April as cash-rich households seek higher returns amid low interest rates and a lack of better investing options. Recent breakthroughs in homegrown artificial intelligence startups and Beijing’s “anti-involution” campaign to curb excessive price competition in several industries have also bolstered risk appetite, despite recent data pointing to a growth slowdown and persistent deflation.

Refer to below Hang Seng Index stocks’ weekly performance table.

Click below for SSE and .HSI weekly chart.

SSE weekly chart

.HSI weekly chart

 

Singapore

The Straits Times Index (STI) fell 0.85% to close at 4265.98, recorded 2^nd consecutive weekly loss. There were only seven stocks recorded positive weekly gains, out of all the 30 STI index stocks.

Refer to below 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.