Stocks Fall on U.S.-China Trade Tensions (Apr-3 Again)

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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 Oct 10, major U.S. stock indexes declined for the week amid fears of reescalating global trade tensions and rising concerns around the impacts of a prolonged U.S. government shutdown. The Nasdaq Composite and S&P 500 Index spent much of the week in positive territory, buoyed by ongoing enthusiasm for companies with artificial intelligence exposure that was supported by several new deal announcements, including a strategic partnership between Advanced Micro Devices and OpenAI that sent shares of the former up more than 20% on Monday.

However, equities turned sharply lower on Friday morning after President Donald Trump posted on social media that he is considering “a massive increase of tariffs on Chinese products” in response to China’s proposed new export controls on rare earths. Gold prices continued their record-breaking rally, surpassing USD 4,000 per ounce for the first time, underscoring the heightened level of geopolitical and economic uncertainty. Refer to below major indexes weekly performance.

Key highlights for the week and next:

1.    U.S. federal government shutdown has rolled into 2^nd week. At 10 days and counting, this is now the fourth-longest shutdown on record, and there are few signs of an imminent breakthrough in Congress. The impacts on the U.S. economy are starting to build. Typically, the effects of government shutdowns on the economy are small and temporary, as activity bounces back upon reopening. Should the shutdown persist into a third week, we might start to see more signs of these disruptions. 

2.    Fed minutes signal cautious support for further rate cuts. With a lack of major economic data releases amid the continuation of the U.S. government shutdown, investors turned their attention to Wednesday’s release of the minutes from the Federal Reserve’s mid-September policy meeting. The minutes showed some divergent opinions among policymakers as they weighed conflicting economic signals. 

3.    Consumer sentiment holds steady in October. The University of Michigan reported that its preliminary October Index of Consumer Sentiment reading came in at 55, relatively unchanged from the prior month. 

4.    Q3 earnings season will be unofficially kicks off with JPMorgan Chase(JPM)’s upcoming report on October 14. Analysts polled by FactSet expect the broad-based S&P 500 Index to log a ninth consecutive quarter of year-over-year earnings growth.

SPX sectors in play

Only two out of the 11 SPX sectors recorded weekly gains. Energy(XLE) and Consumer Discretionary(XLY) were at the bottom of the performance. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three major indexes hit new record highs 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 ended a holiday-shortened week on a mixed note. The Shanghai Composite Index(SSE) edged up 0.37% and the blue-chip CSI 300 fell 0.51% over a two-day trading week ended Friday. China’s stock markets reopened for trading on Thursday, October 9, after being closed for an eight-day break starting October 1.  In Hong Kong, the benchmark Hang Seng Index fell 3.13%.

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

Preliminary data suggested that consumption during China’s so-called Golden Week lagged the activity during the five-day Labor Day holiday in May. Sales at select retailers and restaurants rose 3.3% in the first half of Golden Week, nearly half the pace recorded over the Labor Day break, Bloomberg reported, citing government data. Average passenger traffic for all travelers increased 6.2% over last year’s holiday, according to an estimate from China’s Ministry of Transport, lower than the 8% increase over the Labor Day holiday. The underwhelming consumption data for Golden Week, typically a peak consumption period in China, came as Beijing is trying to rebalance the economy to favor domestic spending and services and pivot away from industry and exports.

Analysts are eyeing China’s fourth plenum, a high-level political meeting of Communist Party officials scheduled for October 20 to 23. During the meeting, officials are expected to deliberate and approve a proposal from top leaders on China’s next five-year plan laying out the country’s economic and social development goals. Analysts pay close attention to any public statements following the meeting for clues about any changes in China’s economic strategy.

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) edged up 0.34% to close at 4427.06 this week, hit new record high of 4474.12 on Tuesday built bullish momentum from previous week, profit-taking seen starting Wednesday to Friday, eventually gave back all its Tuesday’s rally.

Technically, STI index formed a weekly shooting star candlestick which is bearish signal especially after recent extent run-up, bulls may take a breather in comings week(s) though uptrend is still strong by now. 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.