Delta Variant, Economy “Peak” Earnings, Stocks Higher

Summary of content for the week of Jul 23:

1. Week 29 major indexes performance;

2. Week 29 US sector indexes performance;

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

U.S

For the week of end of Jul 23, U.S major indexes closed at record all-time highs, rebounding decisively from Monday’s 700-point drop in the Dow and “market sell-off” headlines. It’s a wild volatile week. The advance was somewhat narrow, however, with much of the gains concentrated in technology and internet-related giants—the so-called FAANG+ stocks, i.e., Facebook, Apple, Amazon, Netflix, Google, Microsoft. The three indexes posted the fourth weekly gain in five. Refer to major indexes weekly and monthly performance table below.

The resiliency came after concerns about the global spread of the Delta coronavirus variant and uncertainty regarding if we have reached peak earnings and economic growth rates led to the early week selloff.

Stocks tied to the reopening of the economy, such as cruise operators and airlines, fared particularly poorly. Energy stocks were also especially weak, as oil prices suffered their biggest daily decline since April 2020 after OPEC and other major oil exporters struck a deal to increase output. Among SPX 11 sectors, Communication Services (XLC) outperformed, while Energy(XLE) and utilities(XLU) lagged. Refer to SPX sector indexes weekly performance below.

Technically, the three major indexes weekly charts remain in strong uptrend. Refer to below major indexes weekly charts.

China/HK

China SSE index edged higher for the week. No major economic readings were released over the week.

In corporate news, Beijing reportedly plans to exempt Chinese companies listing in Hong Kong from having to first seek approval from China's cybersecurity regulator, Bloomberg reported. The move would effectively encourage companies to have their initial public offerings in Hong Kong over the U.S., where many of the country’s largest tech companies are listed.

Hang Seng Index(.HSI) was the worst performer this week, gave back all its previous week’s gain as tech firms were weighed by fresh concerns about China's crackdown on the sector.

Technically, SSE index was in consolidation range hovering around its 50dma, and .HSI index has been in sideways between its 200dma and 250dma. i.e 27800-27200 level. 

Singapore

STI index stalled this week after previous week’s rally, immediate resistance at 3194 recent high and major support at 3104 recent low. 

Inflation Data Again Surprise On the Upside, Stocks Down

Summary of content for the week of Jul 16:

1. Week 28 major indexes performance;

2. Week 28 US sector indexes performance;

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

U.S

For the week of the end of Jul 16, U.S major indexes ended the first week lower after three consecutive weeks up, but the SPX and Nasdaq(COMP) reached a new intra-week high before falling back. Small caps and value stocks further surrendering its leadership over large-cap SPX and technology stocks. Refer to major indexes weekly performance table below.

Major events for the week:

1.    Growth and inflation data appeared to remain in the spotlight during the week. Core consumer prices reported jumping 0.9% in Jun, roughly twice consensus estimates. 

2.    Fed Chair repeated his view on scheduled testimony before Congress on Wednesday, that inflation pressures are temporary. Before raising interest rates, the Fed is widely expected to begin tapering asset purchases designated to keep downward pressure on long-term rates.

Among SPX 11 sectors, defensive sectors Utilities(XLU) and Consumer Staples(XLP) outperformed, while Energy(XLE) lagged. Refer to SPX sector indexes weekly performance below.

Technically, the three major indexes' weekly charts remain in strong uptrend. Refer to below major indexes weekly charts.

China/HK

China SSE index closed higher for the week. China on Thursday reported 2Q GDP growth of 7.9%, down from 18.3% in 1Q, in line with expectation. Foreign investors bought technology, financial, and consumer stocks with solid fundamentals, avoiding expensive theme plays like electric vehicles, according to traders.

Hang Seng Index(.HSI) was the best performer this week, rebounded after the previous week’s hard selloff. Technically, SSE index was in consolidation range hovering around its 50dma, and .HSI index got supported from its 200dma at 27730 level. Both indexes remain bullish on their week charts.

Singapore

STI index closed slightly higher for the week. Its weekly chart in range-bound, immediate resistance at 3194 recent high and major support at 3104 recent low. 

Stocks Closed Solidly Higher, Falling Yields in Focus

Summary of content for the week of Jul 9:

1. Week 27 major indexes performance;

2. Week 27 US sector indexes performance;

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

U.S

U.S major indexes finished out a bumpy week, posting solid gains for the 3^rd week in a row. The technology-heavy Nasdaq was the top gainer in the table. Refer to major indexes weekly and monthly performance table below.

Major events on record for the week:

1.    Major driver of the sentiment during the week appeared to be the steep decline in the U.S Treasury yields, the 10-year note hitting a nearly five-month low before recovering somewhat to end the week.

Among SPX 11 sectors, the interest rate-sensitive real estate sector(XLRE) performed best as longer-term Treasury yields decreased sharply. Energy(XLE)  stocks fared worst on concerns that disagreements among major oil producers would result in some violating output restrictions.  Refer to SPX sector indexes weekly performance below.

Technically, the three major indexes weekly charts remain in strong uptrend. Refer to below major indexes weekly charts.

China/HK

China SSE index edged slightly higher for the week. Selling was pronounced in technology stocks amid heightened regulatory risk on reports that Beijing will tighten oversight of U.S.-listed Chinese companies, many of which are in the tech sector, as well as the government’s continued crackdown on domestic tech companies.

On Friday, the People’s Bank of China unexpectedly announced that it would cut its reserve requirement ratio (RRR), the amount of cash most banks must hold in reserve at the central bank. The move will unleash about RMB 1 trillion of long-term liquidity into the economy, according to Bloomberg, and effectively allow banks to increase lending to smaller companies hurt by rising costs.

Hang Seng Index(.HSI) was the worst index performer in the table above. The index gave back all its 2021 gains before rebounded from its 250dma technical support level and recovered somewhat.

Singapore

STI index closed flat for 2^nd week with little change. Its weekly chart in range-bound, with immediate resistance at 3194 recent high and major support at 3104 recent low. 

Better Economic Data, Stocks Hit Fresh New Highs

 Summary of content for the week of Jul 2:

1. Week 26 major indexes performance;

2. Week 26 US sector indexes performance;

3. Major indexes monthly performance for June;

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

U.S

U.S major indexes finished higher heading into the long holiday weekend, posting gains for a second-straight time on a weekly basis. The SPX and Nasdaq Composite index moved to new highs and closed out a fifth consecutive quarterly advance, while DJI closed at its two-month high. U.S markets will be closed for a public holiday on Monday. Refer to major indexes weekly and monthly performance table below.

Major events on record for the week:

1.    Generally favorable economic data seemed to support sentiment. On Friday, it reported there are 850k nonfarm jobs added in June, well above consensus estimates of around 700k and the most since last August. Weekly jobless claims also fell more than expected, to a pandemic-era low of 364k. 

Despite robust gains last month, total employment is still 6.8 million short of its pre-pandemic level. With the numbers a long way from the Fed’s goal for full, broad-based and inclusive employment, it’s expected there is no urgency to push the shifting policy timeline forward. 

2.    Health officials stress effectiveness of vaccines against delta variant, despite the U.S. saw an increase in cases concentrated in states with lower vaccination rates, and some new restrictions were put in place in Israel and elsewhere.

Among SPX 11 sectors, Technology(XLK) and Healthcare(XLV) outperformed, while Energy(XLE) lagged. Refer to SPX sector indexes weekly performance below.

Technically, the three major indexes weekly charts remain in strong uptrend. Refer to below major indexes weekly charts.

China/HK

China SSE index fell for the week. SSE index recorded its biggest one-day percentage drop since early March on Friday, Reuters reported. Reports of profit-taking by domestic investment funds and open market operations undertaken by China’s central bank to drain funds from the financial system may have contributed to the declines.

In its latest policy meeting, the People’s Bank of China said that it would “keep the macro leverage ratio basically stable," suggesting that the central bank would not tighten policy in the near term.

Hang Seng Index(.HSI) also reversed its previous gain and dropped to two-month low. Technically, both SSE and .HSI indexes are trapped within their multi-month trading ranges respectively. Pls refer to both indexes weekly charts below.

Singapore

STI index closed flat for the week with little change. Its weekly chart in range bound, immediate resistance at 3194 recent high and major support at 3104 recent low.

Monetary Policy Tightening Eased, Stocks Hit Fresh New Highs

 Summary of content for the week of Jun 25:

1. Week 25 major indexes performance;

2. Week 25 US sector indexes performance;

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

U.S

U.S major indexes finished mostly higher for the week ended Jun 25, recorded solid gains and fresh record highs. The SPX and Nasdaq Composite index hit new highs, while DJI fully recovered its previous week’s loss and very near to its recent high. Refer to major indexes weekly performance table below.

Major events happened during the period:

1.    A US$1.2 trillion infrastructure reached on Friday between the White House and bipartisan group of Senators buoyed market sentiment. 

2.    Fed chair’s testimony to Congress on Tuesday, reiterated Fed’s belief that recent spike in inflation will prove temporary, seems to reassure investors. 

3.    All 23 banks passed the annual stress test, clearing the way for lifting the pandemic-related restrictions on dividends and share repurchases. Analysts looking for dividend hikes in the 3Q, and significant acceleration in share repurchases.

Within SPX 11 sectors, Energy(XLE) and Financials(XLF) were top-performing sectors, while Utility(XLU) lagged. Refer to below weekly sector indexes for details.

Technically, the three major indexes' weekly charts remain in strong uptrend. Refer to below major indexes weekly charts.

China/HK

China SSE index added 2.3% for the week, ending a three-week losing streak. Financial stocks led the rally after the People’s Bank of China (PBoC) injected liquidity into the financial system for the first time since February.

Renewable energy names did well after China's National Energy Administration announced that over 50% of rooftop spaces on government buildings would be reserved for solar panels. China now top global clean energy market player, CSOP Asset just launched the first ETF tracking CSI Photovoltaic Industry Index in mainland China. Trading in HKEX, stock code 3134.HK.

Hang Seng Index(.HSI) also reversed its three-week losing streak and closed at around the top of its three-month price range.

Singapore

STI index closed with a modest loss for 2^nd week but still within its five-week trading range from 3104-3194. Singapore's three local banks which account for 40% of the STI index have been in sideway consolidation mode after recent profit-taking. It’s expected the banks will have its pandemic-related dividend restriction lifted this year, which will be positive for bank stocks.

STI weekly chart in range-bound, immediate resistance at 3194 recent high and major support at 3104 recent low.

Headlines Focus on Fed’s Hawkish Outcome, Cyclical Stocks Fell

Summary of content for the week of Jun 18:

1. Week 24 major indexes performance;

2. Week 24 US sector indexes performance;

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

U.S

U.S major indexes finished another week solidly lower for the week ended Jun 18, with DJI and SPX recorded sharply weekly losses and the technology-heavy Nasdaq erasing its gains for the week. The DJI includes many cyclical companies mostly are reliant on economic growth. On the other hand, the Nasdaq(COMP) posted a much more modest loss. Refer to major indexes weekly performance table below.

Major events happened during the period:

1.    Fed’s Jun 15-16 meeting outcome came in as surprisingly hawkish. Fed officials have begun to discuss slowing the central bank’s bond purchases(stimulus), the first step toward eventually raising interest rates. 

2.    Fed signaled that it anticipates two rate hikes by the end of 2023, indicating a faster pace of tightening than in earlier projections.

Within SPX 11 sectors, Large-cap stocks help up better than small-cap. Growth stocks easily outperformed value as investors sold companies in the energy and financials sectors amid fears that the Fed will remove its accommodative policies and raise rates sooner than markets had anticipated. Technology(XLK) outperformed, and Financials(XLF) and Materials(XLB) lagged. Refer to below weekly sector indexes for details.

Technically, the three major indexes weekly charts remain in strong uptrend. Refer to below major indexes weekly charts.

China/HK

China SSE index fell for a third week. New energy vehicle (NEV) stocks rallied on Friday after an official at the 2021 China Association of Automobile Manufacturers projected that the NEV share of new vehicles would increase from 20% to 30% within five to eight years. Industry data showed a NEV penetration rate of 12.0%, a historic high, while domestic NEV sales in May jumped 8.3% from April and more than doubled from a year ago.

Hang Seng Index(.HSI) also fell for third week as well but have recovered most of earlier losses in the week as stocks rallied on Thu and Fri. Immediate major technical support to watch 28000.

Singapore

STI index closed with modest loss this week but still within its four-week trading range from 3104-3194. Singapore will relax its COVID-19 restriction slightly from coming Mon Jun 21 onwards, allowing up to two-person dining in, among other measures.

STI weekly chart in range bound, immediate resistance at 3194 recent high and major support at 3104 recent low. 

Stocks Hovered Near Record, Inflation Soars, Bond Yield Fell

Summary of content for the week of Jun 11:

1. Week 23 major indexes performance;

2. Week 23 US sector indexes performance;

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

U.S

U.S major indexes finished mixed for the week ended Jun 11, a sharp decrease in longer-term yields appeared to help push the SPX index to a record high. The declined in yields favoured growth stocks by reducing the implied discount on future earnings while weighing on financials by threatening banks lending margins. The tech-heavy weighted Nasdaq outperformed and recorded its 4^th week up in a row, while DJI recorded a modest loss. Refer to major indexes weekly performance table below.

Major events happened during the period:

1.    Interest rate and inflation seemed to continue to dominate sentiment. Fed assured they would keep monetary policy highly accommodative for “some time” and that the recent spike in inflation would prove temporary. 

2.    Core Consumer Prices( CPI) reported on Thursday to reach a 13-year high of 5%. 

3.    Senate reached a deal on an infrastructure plan include US$762 billion in new spending, significant less than US$2 trillion Biden originally requested, this plan would not raise corporate taxes.

Within SPX 11 sectors, Health Care(XLV) stocks outperformed. Financials(XLF) lagged. Refer to below weekly sector indexes for details.

Technically, the three major indexes weekly charts remain in strong uptrend. Refer to below major indexes weekly charts.

China/HK

China SSE index fell for a second week. News that the authorities in Guangzhou renewed COVID-19 controls in the face of a fresh outbreak in the week. In response, Macau banned nonresidents from entering via neighboring Guangdong province, causing casino stocks to weaken.

China’s Producer Price Index(PPI) rose to 9% yoy from 6.8% in April due to higher commodity prices. 

Hang Seng Index(.HSI) fell for 2^nd week as well but consolidating within its three-week price range. Immediate technical support at 28700 level.

Singapore

STI index closed with modest gain this week. Singapore shares gained ground this week after government announced to easy Covid-19 restrictions from next Mon onwards.

STI weekly chart in range bound, immediate resistance at 3237 recent high and major support at 3024.