Stocks Up On Economic and Earning Data

Weekly Wrap Content for the week of Oct 15:

1. Week 41 major indexes performance;

2. Week 41 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

U.S

For the week ended Oct 15, the three major U.S indexes rebounded, SPX closed at its four-week high, returning to within 2% of all-time highs, as earnings season kicked off into high gear, thanks to strong results from the big banks. Improving sentiment has favored cyclical assets, with value and small-caps, along with the energy and financial sectors, leading the way recently. Refer to major indexes’ weekly performance table below.

Key highlights for the week/coming week:

1.    Recent market focus: high energy prices and continued pressures from supply chain disruptions. Global oil prices continued their climb to a three-year high. Supply chain issues continue to grab headlines in the form of warnings from retailers struggling to fill shelves ahead of the holidays, while Apple scaled back its expectations for iPhone sales due to semiconductor chip shortages. 

2.    Fed policies amid rising inflation data continue to be under spotlight. It’s expected the Fed to begin tapering as early as next month, with gradual winddown in bond purchases by mid-2022. But actual near-zero interest rate should be maintained for at least another year or so. This means monetary policy will remain supportive for a bull market going forward for some time. 

3.    Initial jobless claims reported on Thursday rallied stocks with biggest gain since March, as the number had fallen to 293k, a new pandemic-era low. For perspective, initial claims peaked at a whopping 6.15million in early Apr 2020, when unemployment rate just below 15%.

For the week, among 11 SPX sectors, Materials(XLE) and the smaller Real Estate (XLRE) stocks led the gains as long-term bond yields fell, Consumer Discretionary(XLY) shares got a boost from Tesla, Communication Services(XLC) shares lagged. Refer to SPX sector indexes weekly performance below.

Technically, all three major indexes' weekly long-term uptrend remains well intact,  SPX index stood above all its 20 and 50dma, and within 2% to its all-time high.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

For the week, mainland Chinese stocks ended nearly unchanged ahead of next week’s quarterly GDP report. As the Shanghai Composite Index (SSEweekly chart) dipped 0.59%.  

Energy crunch. Investors have been spooked by a deepening energy crisis as cold weather swept into much of the country and power plants scrambled to stock up on coal, sending prices of the fuel to record highs. Oil and natural gas prices, which have also soared to multiyear highs, have also sent jitters across China, a net energy importer.

Property developer under stress. Despite continued concerns about China’s property sector, a central bank official said that the spillover effect of China Evergrande Group’s debt problems on the banking system is controllable and that risk exposures are not big. However, as China Evergrande failed to pay nearly USD 150 million worth of coupons on three bonds since Sep. Investors are now awaiting several key dates when Chinese property companies are due to make payments on their debt, with at least USD 92.3 billion of bonds coming up for payment in 2022, according to Refinitiv data.

Hang Kong(.HSI weekly chart) stocks rebounded for the 3^rd week, recoup most of its losses since mid-Sep.

Technically, .HSI index still trading under the downtrend channel, hitting its technical resistance at 50dma 25423 while also near its downtrend resistance at around the level. A break above its 50dma will be a positive sign for further rebound going forward.

Singapore

STI Index(STI weekly chart) ended the week nearly recouping its three-month high at around 3200 level. STI index has appeared very resilient recently despite that other regional key markets were quite volatile.  

Crude Oil Surged to Seven-Year High, Power Crunch in China, Earning Season Coming

Weekly Wrap Content for the week of Oct 8:

1. Week 40 major indexes performance;

2. Week 40 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

U.S

For the week ended Oct 8, the three major U.S indexes recorded gains, with the S&P 500 Index recovering a portion of the previous week’s losses. Nonfarm payroll report on Friday saw job growth figure missed but unemployment rate fell more than expected. The report seemed to preserve expectations that the Fed will still begin to rein in its monthly asset purchases later this year. Investors prepared for the unofficial kickoff of third-quarter earnings reporting season, set to begin with some major bank announcements the following week. Refer to major indexes’ weekly performance table below.

Key highlights for the week:

1.    The yield on the benchmark 10-year U.S. Treasury note briefly neared 1.62%, its highest level since early June, as latest nonfarm payroll missed way below expectation. 

2.    Debt ceiling agreement calms worries, if only temporary. Senate Republicans had agreed to take up a bill to raise the Treasury’s borrowing limit by USD 480 billion, which would allow the federal government to keep paying its bills through at least early December. Debt problems at another Chinese property developer also dampened sentiment. See below China section. 

3.    Energy crunch adding to supply-chain disruptions. Coal, Natural gas and oil prices all spiking up. The rocketing prices have triggered an energy crunch in Europe and China. Crude oil prices hit seven-year high in the week to close at 79.59, as major oil exporters decided not to increase production more than their modest previously agreed-upon amount.

Among 11 SPX sectors, Energy(XLE) stocks led the gains as natural gas prices and crude oil prices hit new highs. The small real estate sector(XLRE) lagged with modest losses. Refer to SPX sector indexes weekly performance below.

Technically, all three major indexes' weekly long-term uptrend remain well intact,  though SPX had its bearish cross in 20dma and 50dma. SPX currently just closed below its 50dma after the recent rebound.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland Chinese stocks rose Friday following the week-long Golden Week holiday as the Shanghai Composite Index (SSE weekly chart) added 0.67%, according to Reuters. Investors looked past the government’s regulatory crackdown, property sector turmoil, and a nationwide power crunch and focused on positive economic data. Data released Friday showed the Caixin/Markit services Purchasing Managers’ Index rose to 53.4 from 46.7 in August, rebounding from the lowest level seen since the height of the 2020 pandemic.

On Friday, Beijing ordered an immediate increase in coal output to fight the nationwide power crunch, Reuters reported. China has been gripped by power shortages, which hurt production in industries across several regions of the world’s second-largest economy.

News from the property sector continued to dominate investor concerns after developers reported sharply lower sales for September, with more announcements of missed debt payments. Fantasia Holdings, a small developer, said that it failed to pay a USD 206 million debt shortly after a subsidiary missed paying a RMB 700 million loan on the due date.

Hang Kong(HSI weekly chart) stocks rebounded for 2^nd week, reversing its losses in early of the week and closed at a three-week high.

Technically, we remain the same stance for .HSI index as the previous week. .HSI index rebounded from its major support level at around 24,000, going forward, it’s expected the index downside is limited. SSE index trading in its three-week consolidation range.

Singapore

STI index(STI weekly chart) ended the week hit a five-week high, rebounded after a three-week down streak. For the coming week, continues to watch out major support level around 3060-3050, upside immediate target at 3180.

Stocks Retreated on Inflation and Interest Rate Fears

 Weekly Wrap Content for the week of Oct 1:

1. Week 39 major indexes performance;

2. Week 39 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

4. Major indexes monthly performance for Sep

U.S

For the week ended Oct 1, U.S stocks experienced their first noticeable dent in some time, as a jump in interest rates reflected inflation concerns and expectations for the Fed to begin tapering this year. The return of rising-rate anxiety spurred the first 5% market drop in a year since Sep. A Friday rally moderated the losses with SPX ended with a 2.2% decline for the whole week. Refer to major indexes’ weekly performance table below.

Historical data shows Sep month has been the weakest month of the year for the stock market. This trend appears to have held well for this year. Refer to below major indexes monthly performance for Sep. All in red except for STI and SSE.

Key highlights for the week:

1.     Rising U.S Treasury yields seemed overhang sentiment throughout the week. 10-year rates have jumped from 1.30% on September 15 to as high as 1.54% last week, reflecting a renewed concern over inflation pressures and reduced Fed-stimulus expectations.

    2.   Debt ceiling and stimulus uncertainty also weigh sentiment. A short-term spending bill was passed to avert another partial shutdown of the U.S government. No progress was made in raising the fed debt limit. 

    3. Supply chain constraints feed inflation worries. Shares in Nike, Bed Bath & Beyond, and Kohl’s fell sharply after the companies reported stressed supply chains and higher labor costs ahead of the holiday shopping season. The recent surge in oil prices, which benefited energy stocks, also raised broader inflation worries.

Among 11 SPX sectors, growth stocks fared worse than value shares. Energy(XLE) and Financials (XLF) outperformed, while Healthcare(XLV) and Technology(XLK) stocks lagged. Refer to SPX sector indexes weekly performance below.

Technically, all three major indexes' weekly candlesticks appear bearish but while their long-term uptrend remain well intact. SPX has its 20dma crossing down 50dma which is bearish in short term.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland Chinese stocks (SSE weekly chart) ended a holiday-shortened week lower. China’s markets were closed Friday for the weeklong National Day holiday starting on October 1 and will resume trading on next Friday.

Positive news concerning indebted property developer China Evergrande Group supported investor sentiment. On Wednesday, Evergrande said that one of its units would sell roughly 20% of its stake in Shengjing Bank Co. to a state-owned enterprise for USD 1.5 billion to help reduce its debt load. News of the asset sale came as Beijing is prodding government-owned companies and state-backed property developers to buy some of Evergrande’s assets, Reuters reported.

Separately, the People’s Bank of China (PBOC) pledged to ensure a “healthy property market” and to protect homebuyers’ rights in a statement following the central bank’s quarterly monetary policy committee meeting.

Hang Kong(.HSI weekly chart) stocks rebounded in the holiday-shortened week, following two-week sharp decline. HK closed for China National Day holiday on Friday and will resume trading on Monday.

Technically, .HSI index rebounded from its major support level at around 24,000 as we expected last week, going forward, it’s expected the index downside is limited.

Singapore

STI Index (STI weekly chart) ended the week with moderate loss, recorded 3^rd week down in a row but it appears the selling pressure is under control. The coming week, continues to watch out for major support level around 3060-3050.

China Evergrande Debt Woes, Stocks Rebound from Sell-off

 Summary of content for the week of Sep 24:

1. Week 38 major indexes performance;

2. Week 38 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

U.S

For the week ended 24 Sep, the major benchmarks overcame an early sell-off to end the week flat to modestly higher. On Monday, the S&P 500 Index recorded its biggest daily drop since May 12, the primary factor was fears that a possible default by China’s second-largest property developer—and the world’s most heavily indebted one—might set off a global financial “contagion” similar to what followed the collapse of Lehman Brothers in September 2008. Stocks regained a large portion of their losses on Wednesday, however, which attributed to news of a restructuring plan for Evergrande, along with a capital injection into the Chinese banking system. Refer to major indexes’ weekly performance table below.

Key economic data update:

1.    Fed two-day meeting concluded Wednesday. As widely expected, they would soon consider tapering purchases of Treasuries and mortgage-backed securities. 

2.    Housing sales strengthen, with both housing starts and permits easily surpassing expectation.

Among 11 SPX sectors, Energy(XLE) and Financials (XLF) outperformed, longer-term bond yield rose sharply over the week, helping financials shares by holding the promise of improving banks’ lending margins. Utilities (XLU) and Smaller Real Estate(XLRE) stocks lagged. Refer to SPX sector indexes weekly performance below.

Technically, all three major indexes weekly candlesticks appear bullish, while their uptrend remain well intact. SPX and Nasdaq trading in between its 20 and 50dma and DJI appears relatively weaker, closed below its 20 and 50dma for the week.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland Chinese stocks (SSE weekly chart) ended a holiday-shortened week broadly flat from the prior Friday’s close after being closed Monday and Tuesday for the Mid-Autumn Festival. The market’s subdued performance was noteworthy after Hong Kong’s Hang Seng Index(.HSI weekly chart) fell more than 3.0% on Monday amid the mounting debt crisis surrounding China’s Evergrande Group. A series of large cash injections by China’s central bank during the week helped ease worries about a disorderly debt resolution for the indebted developer. However, some of Evergrande’s offshore bondholders did not receive their portion of USD 83.5 million in interest payments by a Thursday deadline in U.S. time, Reuters reported on Friday, citing unnamed sources. The company now enters a 30-day grace period, after which it will be considered in default if that period passes without payment.

Technically, SSE index is currently in a three-week consolidation after hitting its year high recorded in Feb, technical indicators appear bullish. .HSI index closed 2^nd week down in a row, tested its major support level at around 24,000 and rebounded just close above it. Going forward, it’s expected the index downside is limited.

Singapore

STI index ended the volatile week with a modest loss but appears the selling pressure is under control. Coming week, continues to watch out major support level around 3060-3050.

STI weekly chart.

U.S Lower 2nd Week

 Summary of content for the week of Sep 17:

1. Week 37 major indexes performance;

2. Week 37 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

U.S

For the week ended 17 Sep, U.S stocks down for 2^nd week,  continues historical norm for Sep month. The markets continued to grapple with uncertainties regarding the Delta variant, global monetary policy tightening timing, fiscal stimulus, and persistent supply-chain challenges. All three major indexes ended down for the week, with the SPX index dropped the most. Refer to major indexes’ weekly performance table below.

Points to Highlights:

1.    Inflation moderates as Core consumer prices increased 0.1% in Aug, as reported on Tuesday, below expectation. 

2.    Bond yields increase as investors await Fed meeting. Fed meeting will be on coming week 21-22 Sep, many observers expected to announce the first steps in tapering monthly assets purchases designed to hold down long-term interest rates.

Among 11 SPX sectors, Energy(XLE) recorded solid gains on the back of rising oil prices, while strength in auto-related shares boosted consumer discretionary(XLY) stocks. The small materials (XLB) and utilities (XLU) sectors lagged. Refer to SPX sector indexes weekly performance below.

Technically, both DJI and SPX indexes traded below their 50dma level, DJI has been below it since last week, and SPX just closed below it this week, which could lead to more room for the downside. Nasdaq index as strongest among the three is still hovering around its 20dma, still got some room above its 50dma.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Chinese stocks fell sharply for the week. The Shanghai Composite Index (SSE weekly chart) was down 2.4%. In Hong Kong, the benchmark Hang Seng Index(.HSI weekly chart) lost 4.9%.

Weak August economic data, a fresh coronavirus outbreak in Fujian province, the growing debt crisis at embattled property developer China Evergrande Group, and the threat of tighter gaming regulations in Macau dampened investor sentiment. Strong trade data and an unexpected yet reportedly candid phone conversation between the U.S. and Chinese presidents lifted investor sentiment. Next week, China’s stock markets are closed Monday and Tuesday for the Mid-Autumn Festival and will reopen on Wednesday, 22 September.

Technically, SSE index retreated after hitting year-high level 3731.69 in Feb, uptrend is still well intact. HSI index dropped to its lowest point of 24424.74 this year in the week. Its YTD return is at -8.5% so far, the weakest among major indexes.  

Singapore

STI index has been trapped within its narrow three weeks trading range, just above its 200dma support level. This week, continues to watch out major support level at its 200dma level 3060 and horizontal support 3050( 3060-3050 support level) in the short run.

STI weekly chart.

U.S Stocks Down, China Up

Summary of content for the week of Sep 10:

1. Week 36 major indexes performance;

2. Week 36 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

U.S

For the holiday-shortened week ended Sep 10, U.S stocks finished four-consecutive days lower, Market concern of the Delta variant and Fed tapering timing persisted. All three major indexes ended down for the week, with the DJI index dropped the most. Refer to major indexes’ weekly performance table below.

Major events:

1.    Softening consumer demand impacted by the delta variant. Payroll gains dropped sharply in Aug seemed to linger around and exacerbate worries about the slowing down in economic rebound.

    2. Inflation worries. The producer prices reported on Friday rose 0.7% MoM, above consensus, indicating inflation comes in hotter than expected.

    3.  Biden’s stimulus plan faces new uncertainties as whether his plan can be passed in Senate.

All 11 SPX sectors ended in the red for the week with the small Real Estate(XLRE) led the declines as longer-term interest rates increased, while Consumer Discretionary(XLY) and Financials(XLF) held up best. Refer to SPX sector indexes weekly performance below.

Technically, the three major indexes' weekly charts remain in uptrend BUT they appear peaking and losing steam after running up without major pullback, the last time the SPX experienced a 5% or more pullback was about a year ago, in Sep 20, when stocks declined 9.6% from highs.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Chinese stocks rose for the 3^rd straight week. The Shanghai Composite Index (SSE weekly chart) gained 3.4%. In Hong Kong, the benchmark Hang Seng Index(.HSI weekly chart) gained 1.2%.

Strong trade data and an unexpected yet reportedly candid phone conversation between the U.S. and Chinese presidents lifted investor sentiment. China’s exports in August increased 25.6% over a year earlier, while imports climbed 33.1%, according to the country’s statistics office. China’s monthly trade surplus rose to USD 58.34 billion in August, up from July’s USD 56.58 billion.

Technically, SSE index rebounded back to its top level hit in Feb this year, with very bullish weekly candlestick. HSI index also closed on its 3^rd week up streak. Much weaker as compare to SSE index, as China’s crackdown on tech giants mainly listed in HK.

Singapore

STI index rebounded after about a month’s retracement and consolidation, led by the banks. Technically, watch out major support level at its 200dma level 3060 and horizontal support 3050( 3060-3050 support level) in short run.

STI weekly chart.

 

U.S Stocks Mixed, China to Launch a New Beijing Stock Exchange

Summary of content for the week of Sep 3:

1. Week 35 major indexes performance;

2. Week 35 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

4. Major indexes monthly performance for August

U.S

For the week ended Sep 3, U.S stocks headed into the long holiday weekend mixed, Nasdaq and SPX indexes notched yet another record high and the narrow blue-chips focused DJI closed with a modest loss. U.S financial markets will be closed on Monday for a Labour Day holiday. Refer to major indexes’ weekly performance table below.

For the month of August, Nasdaq Composite Index was the best performer with a 4% gain, while Singapore's STI lagged with a 3.5% down. Refer to below major indexes monthly performance table.

Major events:

1. Jobs growth slows in Aug. As reported on Friday, Aug nonfarm payroll grew by 235k, much below the forecast 750k. The impact of the delta variant of the coronavirus in the leisure and hospitality services sectors was clear. The bad news was largely taken as good news, as it seemed to make the Fed less likely to begin tapering asset purchases later this year.

2. Aug U.S services sector activities slowed but remained solidly in expansion territoty.

Among 11 major SPX sectors, Energy(XLE) and Financials(XLF) outperformed this week, while Utilities (XLU) lagged. Refer to SPX sector indexes weekly performance below.

Technically, the three major indexes' weekly charts remain in an uptrend.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Chinese stocks rose for a second consecutive week. The Shanghai Composite Index (SSE weekly chart) gained 1.7%. In Hong Kong, the benchmark Hang Seng Index(.HSI weekly chart) gained 2%.

1.    Chinese companies posted robust earnings for the June quarter, with a 36% annual increase in earnings per share, according to mainland broker CITIC. Upstream resources sectors saw the strongest earnings growth, followed by new energy vehicles and semiconductors. The consumer, pharmaceutical, and telecom sectors lagged. 

2.    On Thursday, President Xi Jinping announced the launch of a new stock exchange in Beijing. The new exchange is aimed at providing equity financing for small and mid-size enterprises and reflects China’s strong commitment to its capital markets. 

3.    The People’s Bank of China said that it would provide RMB 300 billion in low-cost funding to banks for lending to small and medium-sized enterprises (SMEs).

Technically, the SSE index was trading near its top since May 2021 after two weeks rebound. .HSI index appears much weaker, still within its three-week trading range after two consecutive weeks bounce, as investors are still wary of the top tech stocks crackdown impact, which believed has not ended yet.

Singapore

STI index ended flat after had falling for three weeks in a row, the index was the worst index performer in Aug, lost 3.5%. Technically, expected it will have its support at 200dma level 3050 for the near term.

STI weekly chart.