U.S. Government Shutdown: Limited Impact on Stocks

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 Oct 3, major U.S. stock indexes solid gains, shrugging off the U.S. government shutdown that began on Thursday. In a “bad news is good news” environment, equities appeared to draw support from the September private payrolls report from payroll processing firm Automatic Data Processing (ADP) showing jobs lost. The labor market data seemingly made it more likely that the Federal Reserve will cut rates at its October meeting. The technology-heavy Nasdaq Composite Index(COMP) outperformed with 1.32% weekly gain, and growth stocks outpaced value. Both DJI and SPX indexes added more than 1% as well. Refer to below major indexes weekly performance.

Refer to below table for major index monthly performance for Oct.

Key highlights for the week and next:

1.    Government shutdown begins. At the stroke of midnight on Sept. 30, the U.S. government officially shut down after lawmakers failed to reach a funding agreement. The immediate impact: a halt to nonessential government operations, widespread furloughs and a pause in key public services. For investors, perhaps the most consequential disruption is the suspension of critical economic data releases, such as inflation and employment reports, that markets and the Federal Reserve rely on to guide decisions. 

2.    Crude oil price(WTI) dropped over 7% after the OPEC+ group of major oil producing nations signaled that it will boost production in November, holding back value stocks. 

3.    Gold gaining more than 3% to extend its strong year-to-date run. Copper, which is sometimes considered a barometer for the manufacturing sector because of its industrial uses, jumped over 7%. 

4.    Investors focus on ADP labor market report in absence of government data. The September ADP data, which showed the economy losing 32k jobs. Consensus expectations had been for ADP to report 51k jobs added, so the weakness seemed to increase market conviction in fed rate cuts to come. 

SPX sectors in play

Seven out of the 11 SPX sectors recorded weekly gains. Healthcare(XLV) and Tech(XLK) outperformed, while Energy(XLE), Consumer Discretionary(XLY) and Communication Services(XLC) lagged. 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 rose in a holiday-shortened week. The Shanghai Composite Index(SSE) added 1.43% and the blue-chip CSI 300 advanced 1.99%. China’s stock markets are closed from Oct 1 to Oct 8 for the National Day holiday and Mid-Auttumn Festival and will resume trading Thursday, Oct 9. In Hong Kong, the benchmark Hang Seng Index rose 3.88%, it closed Wednesday for National Day. (refer to the above weekly performance table).  

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

The eight-day break—also known as the Golden Week holiday—marks a period of high consumption in China as millions of people travel, shop, and eat out. The surge of spending is expected to boost domestic consumer stocks from liquor companies to domestic airlines. Analysts scrutinize sales data from Golden Week to gauge the health of Chinese consumers, who are key to Beijing’s effort to rebalance the economy toward consumption and service industries.

China’s official manufacturing Purchasing Managers’ Index (PMI) improved to 49.8 in September from 49.4 in August. The official nonmanufacturing PMI, a gauge of construction and services activity, fell more than expected to 50 from August’s 50.3 reading. Though the manufacturing PMI reading beat economists’ median forecast, it marked the sixth straight month of declines in factory activity. Both PMIs indicated that weakness in China’s economy persisted into the third quarter, following strong growth in the first half of the year.

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) added 3.42% to close at 4411.95 this week, hit new record high after two-week’s retracement. STI closed above 4,400 level for the first time in history, recent high in sept was 4375. Seeing serious buying across banks, property, industrials. STI record all time high was 3,831 in 2007 or nearly 2 decades ago. 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.