U.S Stocks Retreat on Rate Fears

Weekly Wrap Content for the week of Aug 19:

1. Week 33 major indexes performance;

2. Week 33 US sector indexes performance;

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

U.S

For the week ended Aug 19, U.S stocks closed in negative territory, causing the S&P 500 to snap its four-week winning streak. The halt in the market’s rally came amid the release of the minutes from July’s FOMC meeting earlier this week, in which comments indicated that the central bank would likely continue to hike rates in the short term. The U.S. dollar resumed a rally and is near multi-decade highs, while Treasuries fell to boost yields and the inversions on the curve remain intact. Crude oil gained ground, while gold prices traded lower. Subdued summer trading was accompanied by some volatility Friday as USD 2.3 trillion in options expired. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Bullard doesn’t see inflation peak. In an interview with The Wall Street Journal on Thursday, St. Louis Fed President James Bullard questioned whether inflation had really peaked despite the surprise downturn in the year-over-year increase in the consumer price index (from 9.1% in June to 8.5% in July) reported the previous week. He was likely to vote in favor of another 75-basis-point increase in the federal funds target rate at the Fed’s next policy meeting. 

2.    July data generally surprise on the upside. Some upward surprises in the week’s economic data may have fueled rate fears, even as they offered hope that the economy would avoid a recession. 1) Retail sales proved more resilient than expected in July, rising 0.7% once the volatile gas and auto segments were excluded. 2) Industrial production was also strong, rising 0.6% in the month, roughly twice consensus expectations. 3) Weekly jobless claims ticked lower, betraying expectations for an increase.

SPX sectors in play

Only three out of 11 sectors in the S&P 500 advanced this week. The growth-oriented technology(XLK) and communication services(XLC) sectors underperformed, with the latter dragged down by a sharp decline in Facebook parent Meta Platforms. Energy stocks(XLE) and Consumer Staples(XLP) outperformed. Refer to below sector indexes weekly performance table.

Technically all three major indexes declined, after four-week winning streak. Technology dominant Nasdaq composite index led the losses with 2.6% down.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stock markets posted a loss for the week in reaction to weak economic data and elevated levels of COVID cases, with drought conditions in parts of the country adding to the gloom. The broad, capitalization-weighted Shanghai Composite Index(SSE weekly Chart) dipped 0.6% and the blue chip CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, eased 1%.

Data released during the week showed retail sales in July grew 2.7% year on year while industrial output was 3.8% higher than a year ago. Both data sets were below expectations. In the property sector, data showed China’s home prices fell for an 11th month in July. New home prices in 70 cities declined 0.11% from June, when they fell 0.1%, according to the National Bureau of Statistics. Existing-home prices fell 0.21%, the same as a month earlier.

It was the worst seven-day period for China in terms of COVID infections since mid-May, with more than 18,000 new local cases recorded, Bloomberg reported. The government also issued a national drought alert as soaring temperatures threatened crops and industrial activity, with regions from Sichuan in the southwest to Shanghai in the Yangtze Delta facing extreme heat. The severe heat wave has sparked power shortages and forest blazes. Sichuan, which accounts for 5% of China’s gross domestic product, is exceptionally vulnerable due to its reliance on hydropower.

The PBOC lowered its seven-day reverse repo rate—the main rate at which it provides short-term liquidity to banks—to 2.00% from 2.10% and the one-year Medium-Term Lending Facility (MLF) rate to 2.75% from 2.85%. More steps could follow, including a cut in the loan prime rate (LPR). The LPR is a lending reference rate set monthly by 18 banks and announced by the PBOC.

Hang Seng index (.HSI weekly chart) was down 2% this week. Technically, the index formed an inside-bar on its weekly chart within previous’ week. Technical indicators appear still weak while it trading near its May bottom.

Singapore

STI index (STI weekly chart) eased 0.7% this week-its 2^nd weekly loss. Technically, it appears the index is in profit-taking after a previous strong three-week rally, given back partial of its gains, rather than bearish downtrend. The STI index has been outperformed YTD as compared to other major indexes in my table above. Immediate support at 3238- its 200dma level.

Source: Contents/Data including information from various public market reports

U.S Inflation Moderated, Stocks Rally

Weekly Wrap Content for the week of Aug 12:

1. Week 32 major indexes performance;

2. Week 32 US sector indexes performance;

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

*Contents/Data including information from various public market reports

U.S

For the week ended Aug 12, U.S stocks closed solidly higher to cap off a week that saw the S&P 500 notch its fourth-straight weekly gain. Equities appeared to be spurred on by the positive sentiment brought about by a round of cooler inflation data this week, which has helped ease expectations of how aggressive the Fed will remain going forward.

Since the beginning of the third quarter (June 30), equity markets have had a stellar move higher, with the S&P 500 up over 12%, cutting its losses for the year nearly in half. Similarly, the technology-heavy Nasdaq is up about 17%, bringing its losses for the year down to about -17%. And this week's inflation readings have only helped add to the positive momentum we have seen over the past six weeks or so. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Inflation. Headline inflation came in nicely below expectations for the month of July, largely driven by lower fuel and energy prices. In July we had seen average U.S. gasoline prices fall by around 8% and WTI crude oil down by 11% over the month of June. This supported a headline CPI inflation that came in at 8.5%, versus expectations of 8.7%, and below last month's 9.1% reading. 

2.    Markets expect the fed funds rate to climb to the 3.50% - 3.75% range in 2022, before pausing in 2023. Markets now expect a 50-basis-point rate hike (0.50%) at the September meeting versus a 75-basis-point hike just earlier this week. The expectation now is for another 50-basis-point hike in November, followed by a 25-basis-point hike in December, bringing the fed funds rate to a 3.50%-3.75% range before pausing.

SPX sectors in play

All 11 sectors in the S&P 500 advanced this week, led by Energy stocks(XLE), Consumer Staples(XLP) lagged. Refer to below sector indexes weekly performance table.

Technically all three major indexes hit new high since 2 May, Nasdaq and SPX recorded their 4^th weekly gains.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stock markets ended the week on a mixed note as a flare-up in coronavirus cases offset news of a record trade surplus last month and a central bank report signaling support for growth. The broad, capitalization-weighted Shanghai Composite Index(SSE weekly Chart) added 1.5% and the blue chip CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, inched up 0.8%.

The spike in coronavirus infections coupled with a continued housing market slowdown are considered among the largest risks to China’s economy in the near term. Coronavirus cases in China climbed to a three-month high, roughly half of them recorded in the southern coastal island of Hainan, which was widely locked down last week. China reported a record trade surplus of USD 101.26 billion in July, surpassing the USD 90 billion consensus forecast.

Hang Seng index(.HSI weekly chart) edged lower 0.1% this week. Technically, the index formed a directionless weekly candlestick within previous’ week. A breakout above 20250 weekly high would give early signal for a bullish reversal.

Singapore

STI index (STI weekly chart) eased 0.4% this week after three-week up streak. Technically, STI weekly chart appears still bullish, immediate resistance 3307 weekly high, and downside support at 3235- its 200dma level.

U.S. Stocks Mixed After Strong Jobs Report

Weekly Wrap Content for the week of Aug 5:

1. Week 31 major indexes performance;

2. Week 31 US sector indexes performance;

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

*Contents/Data including information from various public market reports

U.S

For the week ended Aug 5, U.S stocks were mixed as a much stronger-than-expected jobs report revived investor concerns that the Federal Reserve will need to maintain an aggressive pace of interest rate hikes to tamp down high inflation. The Nasdaq Composite. Russell 2000, and S&P 500 Index finished with gains, while the Dow Jones Industrial Average recorded negative results. Equity markets continued to receive support from above-consensus corporate earnings reports. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Job market still strong. Friday’s payrolls report from the Labor Department showed employers added 528,000 nonfarm jobs in July, more than double consensus expectations of around 250,000, and May and June estimates were revised up by a combined 28,000. Following the strong July gains, total nonfarm employment in the U.S. has now returned to its pre-pandemic level. The unemployment rate fell to 3.5%, matching its February 2020 level. 

2.    Treasury Yields Increase. The strong payroll report and hawkish messaging from Fed officials helped drive U.S. Treasury yields higher over the week, outweighing downward pressure from rising U.S.-China tensions following House Speaker Nancy Pelosi’s visit to Taiwan.

SPX sectors in play

Six out of 11 sectors in the S&P 500 recorded gains in the week. Big cap growth stocks outperformed. Tech(XLK), Communication Services(XLC) and Consumer Discretionary(XLY) were among top sectors gainers. While Energy(XLE) lagged. Refer to below sector indexes weekly performance table.

Technically Nasdaq and SPX recorded 3^rd weekly gains while Dow eased after two weeks gains.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stock markets eased as geopolitical tensions, mortgage boycotts, and tepid economic data kept buyers on the sidelines. The broad, capitalization-weighted Shanghai Composite Index(SSE weekly Chart) fell 0.8% and the blue chip CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, fell 0.3%.

U.S. House of Representatives Speaker Nancy Pelosi’s trip to Taiwan infuriated Beijing, which held live-fire drills in the waters around the self-ruled island and imposed sanctions on Pelosi and her immediate family. Chinese chipmakers’ shares jumped as traders bet that the government would increase support for the domestic semiconductor industry at a time when the U.S. is ramping up efforts to curb China’s rise in chip manufacturing. Last week, the U.S. Congress passed the CHIPS and Science Act, which aims to prop up the U.S. semiconductor industry and contains restrictions on chip firms considering expanding in China.

On the economy front, the official manufacturing purchasing managers’ index (PMI) fell to 49.0 in July from 50.2 in June, below the 50-point mark that separates contraction from growth and the lowest in three months. The non-manufacturing business activity index fell to 53.8 from 54.7 in June and the composite PMI, which includes manufacturing and services, fell to 52.5 from 54.1.

Hang Seng index(.HSI weekly chart) edged higher on close after spiked down intra-week new low since May 13.  Technically, the index appears still weak below both its 20 and 50dma.

Singapore

STI index (STI weekly chart) advanced 3rd consecutive week. Technically, the index closed up every day this week, led by banking stocks. Immediate next target (resistance) 3300, and downside support at 3235- its 200dma level.

U.S. Technical Recession, Stocks Rebounded

** Contents/Data including information from various public market reports

Weekly Wrap Content for the week of Jul 29:

1. Week 30 major indexes performance;

2. Week 30 US sector indexes performance;

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

U.S

For the week ended 29 Jul, U.S three major indexes posted solid gains despite another outsized 75-basis-point rate hike from the Federal Reserve (Fed) and news that the economy contracted at a 0.9% annual rate in the second quarter, marking the best monthly gain for the S&P 500 since August of 2020. The advance came amid upbeat earnings results from some key heavyweight companies, headlined by stronger-than-expected results from Dow member Apple and Amazon. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Rates hike. Jul Fed meeting in the week raised rates by 75 basis points(0.75%),bringing the benchmark fed funds rate to about 2.5%. Fed funds rate is now close to the Fed's estimate of a neutral rate, indicating an official end of the post-pandemic easy money policy. Fed referenced rates range of 3.0%-3.5% by the end of the year. Markets currently anticipate a 50-basis-point hike in September, followed by two 25-basis-point hikes in November and December. 

2.    GDP. Q2 GDP is at -0.9% QoQ. This was the second quarter in a row of a negative GDP reading in the U.S., which is largely considered a technical definition of a recession. 

3.    Q2 Earnings. About 50% of the companies in the S&P 500 reported earnings during the week. investors focused on quarterly numbers from technology giants such as Amazon.com, Apple, and Google parent Alphabet. Amazon.com and Alphabet jumped on Wednesday after posting better-than-feared earnings results after the market closed on Tuesday.

SPX sectors in play

All 11 sectors in the S&P 500 recorded gains in the week. Growth stocks outperformed value stocks on weakness in the retail sector. Energy(XLE), Industrials(XLI) and Consumer Discretionary(XLY) were among top performers. Exxon Mobil and Dow component Chevron topped estimates amid the spike in energy prices and increased demand. Dow member Apple and Amazon posted stronger-than-expected results help lifted Consumer Discretionary and Tech indexes. Refer to below sector indexes weekly performance table.

Technically there have been rallies in the past two week for all the three indexes but still in downtrend. Nasdaq was the strongest one with 20dma had a bullish crossover 50dma in the week.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China markets eased after a high-level meeting of the ruling Communist Party dropped calls that it will strive to meet its 2022 growth target and gave no indication of new stimulus. The broad, capitalization-weighted Shanghai Composite Index(SSE weekly Chart) eased 0.5% and the blue chip CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, fell 1.6%.

“The meeting urged efforts to consolidate the upward trend of economic recovery, keep employment and prices stable, keep the economy running within an appropriate range, and strive for the best possible outcome,” state media reported. Analysts said that the statement signaled that the government was implicitly giving up on its annual growth target of about 5.5% without setting a new number. On Thursday, the IMF lowered its full-year growth forecast for China to 3.3% from its April forecast of 4.4% and reduced its 2023 forecast by half of a percentage point to 4.6%.

Hang Seng index(.HSI weekly chart) fell to its lowest in nine weeks as Alibaba Group Holding to Meituan paced losses amid renewed regulatory concerns. Technically, the index appears still weak below both its 20 and 50dma.

The tech sector was weak after The Wall Street Journal reported that Jack Ma, founder of e-commerce giant Alibaba Group, was planning to cede control over Ant Group, the financial technology group spun off from Alibaba in 2011. Ant operates the world’s largest mobile payment app Alipay, which has more than 1 billion users and is indirectly controlled by Ma. On Monday, Alibaba announced plans for a primary listing in Hong Kong while keeping its U.S. listing.

Singapore

STI index (STI weekly chart) advanced 1% for the week, its 2^nd consecutive weekly gains. Technically, the index had a bullish breakout two weeks ago after long time sideways consolidation, which built a strong base for bulls. Immediate next target (resistance) 3250, and downside support at 3150-3160 level.

Signs of Slowing Economy and Earnings, Possible Turnaround in Sentiment

Weekly Wrap Content for the week of Jul 22:

1. Week 29 major indexes performance;

2. Week 29 US sector indexes performance;

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

4. Contents inluding information sourced from various public market reports

U.S

For the week ended 22 Jul, U.S three major indexes registered their highest close in seven-week streak, as stocks carried over momentum from late the previous week as investors appeared to welcome signs of a slowing economy and fading inflationary pressures. Stocks rose for the week, adding to a run that put the S&P 500(SPX) up 9% over the last month, though still down around 17% YTD. Signs of peaking inflation, relief from rising yields and most recently, corporate earnings announcements believed to be the supportive catalysts for the rally. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Q2 earning reports are undergoing, many of which indicated a slowing economy but also some greater resilience in corporate profits and outlooks than many had expected. Dow component American Express rallied after topping expectations. SNAP reported a flat increase in advertising revenue in the second quarter and failed to offer guidance for the remainder of the year. 

2.    Longer-term U.S. Treasury yields hit two-month lows on weak economic data. Preliminary July manufacturing and services sector reports all signaled slowing business activity, notably a drop into contraction territory for the U.S. services sector. The weak economic data briefly pushed the yield on the benchmark 10-year U.S. Treasury note down to 2.73% on Friday morning, its lowest level in nearly two months.

SPX sectors in play

Nine out of 11 sectors in the S&P 500 recorded gains. Small-cap shares and the technology-heavy Nasdaq Composite outperformed. Consumer discretionary(XLY) shares performed best, helped by rebounds in Amazon.com and Tesla, while the typically defensive health care(XLV) and utilities(XLU) sectors lagged. Weakness in Verizon and Google parent Alphabet also weighed on communication services(XLC) shares. Refer to below sector indexes weekly performance table.

Technically all three indexes are still in downtrend, but have crossed and closed above both 20 and 50dma since they crossed below in Apr. Technically bullish signs.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China markets posted mixed returns after Premier Li Keqiang tempered expectations of excessive stimulus and indicated flexibility on China’s annual growth target. The broad, capitalization-weighted Shanghai Composite Index(SSE weekly Chart) added 1.3% and the blue chip CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, dipped 0.2%.

At a meeting of global business leaders hosted by the World Economic Forum, Li said that as long as employment is relatively sufficient, household income grows, and prices are stable, slightly higher or lower growth rates are both acceptable. China issued a growth target of about 5.5% for 2022 at a Politburo meeting in April, but many economists believe that Beijing will have a hard time meeting its goal.

China’s cybersecurity regulator fined Didi Global CNY 8 billion (USD 1.2 billion), potentially signaling an end to the government’s crackdown on the ride-hailing app and clearing a path for a public listing in Hong Kong. Didi was one of the most high-profile targets of Beijing’s clampdown on the country’s internet industry starting in 2020, when regulators unexpectedly canceled the initial public offering of Ant Group.

Hang Seng index(.HSI weekly chart) advanced, taking the index to its best weekly gain this month after China’s banking regulator pledged to take measures to defuse a property and banking crisis caused by a credit squeeze. Technically, the index appears still weak below both its 20 and 50dma.   

Singapore

STI index (STI weekly chart) advanced 2.65% for the week, its best since Feb 11 week. Technically, the index has had a bullish breakout this week from its six-week sideway consolidation range, closed at six-week high. Immediate next target (resistance) 3250, and downside support at 3100 level.

Inflation Under Spotlight, Stocks Volatile

Weekly Wrap Content for the week of Jul 15:

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 ended 15 Jul, U.S stocks remained volatile in light summer trading, as investors absorbed inflation data and the first major second-quarter corporate earnings reports. On Thursday morning, the S&P 500 Index touched its lowest intraday level since June 22 but rallied sharply to end the week. The week’s inflation data seemed to be interpreted as unambiguously good news, helping to spark a solid rally to end the week. Americans’ inflation expectations appear to moderate. The decline seemed to feed expectations that the Fed would move less aggressively than feared at its next policy meeting, raising rates by 75 basis points (0.75%) rather than the 100 basis points futures markets had begun to indicate. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Inflation. Wednesday morning’s data uniformly came in hotter than expected, sending markets sharply lower. The Labor Department reported that the consumer price index (CPI) rose by 9.1% over the 12 months ended in June, the highest increase since 1981, with prices jumping 1.3% in June alone. 

2.    Yield curve inversion. The yield on the benchmark 10-year U.S. Treasury note fell over the week, as an inversion in the closely watched 2-year/10-year segment of the Treasury yield curve, considered by some to be a recession signal, reached its widest level since 2000. The 10-2 Yield spread at -20.42(-0.2%).

SPX sectors in play

All but one out of 11 sectors in the S&P 500 in red. Consumer Staples(XLP) was the only sector closed with gains. On Friday, Technology(XLK) stocks were among the best performers, helped by solid gains in Apple. Energy(XLE) stocks underperformed this week as international oil prices fell to levels not seen since before Russia’s invasion of Ukraine. Refer to below sector indexes weekly performance table.

Technically all three indexes are still in downtrend, but have been in sideway consolidation for past five weeks already. Inflation holds the key to a durable rebound.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China markets eased as data revealed that the country’s economy slowed sharply in the second quarter, and a growing movement among homebuyers to stop paying their mortgages hurt property and banking shares. The broad, capitalization-weighted Shanghai Composite Index(SSE weekly Chart) fell around 3.8% this week.

China’s GDP for the June quarter grew a worse-than-expected 0.4% from a year earlier, official data showed, compared with a 4.8% expansion recorded in the first quarter. Friday’s GDP followed reports of a rapidly growing number of Chinese homebuyers who have refused to pay mortgages for unfinished construction projects. Homebuyers have halted mortgage payments on at least 100 projects in more than 50 cities across China as of Wednesday, a sharp increase from just days before, Bloomberg reported.

Hang Seng index(.HSI weekly chart) suffered worst week in two years since March 2020. An inquiry into an alleged data leak pummelled Alibaba Group Holding and other tech peers. Goldman cuts China forecast on weak GDP. Technically, the index slumped to seven-week low.  

Singapore

STI index (STI weekly chart) was down 32.11points or 1% for the week. Technically, the index has been trading sideways consolidation for the past five weeks, in the range of 3072 to 3165, technical indicators appear weak with major technical support to watch for coming week(s) at around 3050, immediate upside resistance at 3150.

U.S Stocks Rebound, SPX Out of Bear Market Territoty

Weekly Wrap Content for the week of Jul 8:

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

For the week ended 8 Jul, U.S stocks erased much of the previous week’s losses on optimism that the Federal Reserve will be able to curb inflation without tipping the economy into a recession. The gains pulled the S&P 500 Index out of bear market territory, leaving it down 19.1% from its January peak at the close of trading Friday. Economic data appeared to dominate sentiment, as investors sought to assess the possible impact on Fed policy. The moderating economic data may have prompted some investors to brush off the hawkish stance that the Federal Reserve reiterated in its June meeting minutes, which were released on Wednesday. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Friday’s payrolls report from the Labour Department showed employers added 372,000 nonfarm jobs in June, well above consensus expectations of around 270,000. 

2.    The ISM released final estimates of services activity in June, which came in modestly above consensus estimates but indicated a continuing slowdown in growth. The ISM’s measure hit its lowest level since June 2020, and its employment gauge fell into contraction territory for the third time this year, according to Reuters. 

3.    The yield curve – The stronger-than-expected jobs report lifted the yield on the benchmark 10-year U.S. Treasury note to roughly 3.10% at the close of trading on Friday amid a broad rise in U.S. rates. The closely watched 2-year/10-year segment of the Treasury yield curve inverted as the 2-year yield climbed above the 10-year yield—a common, if imperfect, signal of a coming recession.

SPX sectors in play

Five out of 11 sectors in the S&P 500 recorded gains this week. The large Communication Services(XLC), Consumer Discretionary(XLY), and Technology(XLK) sectors performed best within the index. Energy(XLE) shares fell sharply on Tue as domestic oil prices fell back below USD 100 per barrel for the first time in nearly two months, but they rallied alongside crude prices later in the week. Refer to below sector indexes weekly performance table.

Technically all three indexes are still in downtrend, but with some positive signs as they closed above 20dma and approaching to 50dma, indicate bulls are trying to fight back.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China markets eased as rising coronavirus cases and elevated geopolitical tensions hurt sentiment. The broad, capitalization-weighted Shanghai Composite Index(SSE weekly Chart) fell around 1%.

China’s Ministry of Finance is considering allowing local governments to sell CNY 1.5 trillion (USD 220 billion) of special bonds in the second half of this year to boost infrastructure funding, Bloomberg reported. Reuters reported that China will set up a state infrastructure investment fund worth CNY 500 billion (USD 74.69 billion) to spur infrastructure spending and support the economy.

In economic readings, the Caixin Services Purchasing Managers’ Index (PMI) for June surged to a better-than-expected 54.5 from 41.4 in May, the latest evidence that China’s economy is recovering from easing virus restrictions.

Hang Seng index(.HSI weekly chart) fell 0.61%, gave back its previous weekly gain.  Technically, the index still shows positive sign of recovery as it closed above its 20 and 50dma.  

Singapore

STI index (STI weekly chart) has been in 3^rd week of sideway consolidation, within its range of 3090-3165. Major technical support to watch at around 3050 level.

Recession Worries Deepen

Weekly Wrap Content for the week of Jul 1:

1. Week 26 major indexes performance;

2. Week 26 US sector indexes performance;

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

U.S

For the week ended 1 Jul, U.S stocks surrendered a portion of the previous week’s strong gains, as worries grew that the Federal Reserve’s fight against inflation would push the economy into recession.

The S&P 500 Index closed out its worst first half of the year since 1970, as was widely reported, although the decline was amplified by the index reaching its all-time high on January 3. Typically defensive segments within the index, such as utilities and consumer staples, held up best, while consumer discretionary and information technology shares were particularly weak. Markets were slated to be closed on Monday, July 4, in observance of the Independence Day holiday. Refer to major indexes’ weekly performance tables below.

The S&P 500 Index ended the first half down about 20%, in bear-market territory, which historically is a signal itself that the economy is in a recession or one is pending. Since 1950, nearly 70% of bear markets coincided with recessions.

Key highlights for the week and outlook:

1.    Much of the week’s economic data missed consensus expectations, and some signals suggested that economic activity might even be slowing. May personal consumption expenditures (PCE), adjusted for inflation, fell 0.4% in May, the first decline in 2022. 

2.    The silver lining for investors in the PCE data was a downside surprise in inflation signals. The Fed’s preferred inflation gauge, the core (less food and energy) PCE price index came in at 4.7% for the 12 months ended in May, slightly below expectations and the lowest level since November. 

3.    The yield curve – the difference between the 10-year and two-year yield – has also flattened, now around 0.05%, closing in on 0.0% and even turning negative, or inverting. The flattening yield curve is certainly another signal of growth concerns ahead.

SPX sectors in play

Four out of 11 sectors in the S&P 500 recorded strong gains. Defensive sectors such as Utilities(XLE), Energy(XLE) and Consumer Staples(XLP) stocks outperformed this week. Consumer Discretionary(XLY) and Technology(XLK) stocks were among top losers. Refer to below sector indexes weekly performance table.

The sectors that have relatively outperformed this year, aside from energy, have been defensive parts of the market: utilities, consumer staples, and health care. These are traditionally considered "recession-proof," as households generally consume these items regardless of economic conditions.

Technically all three indexes are still in downtrend, their weekly charts are as follows.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China markets advanced on the back of strong factory data and easing coronavirus restrictions for travelers. The broad, capitalization-weighted Shanghai Composite Index(SSE weekly Chart) rose 1.13%, and the blue chip CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, gained 1.6%.

On Tuesday, China halved the quarantine times for inbound travelers. Under the new policy, travelers must spend seven days in a quarantine facility then monitor their health at home for three days, down from 14 days under hotel quarantine in many parts of the country and as many as 21 days of isolation in the past.

In economic readings, the official manufacturing and services purchasing managers’ index (PMI) both rose above 50 in June as a drop in new omicron infections allowed the government to ease restrictions. The manufacturing PMI reached 50.2 in June, up from 49.6 in May, while the nonmanufacturing PMI rebounded to 54.7 in June from 47.8 in May.

Hang Seng index(.HSI weekly chart) closed up 0.65% the holiday-shortened week, it hit intra-week high since Apr 2022 on Tuesday but was down two days after that by profit-taking along other markets as recession worries deepened. Technical indicators remain bullish. It’s now trading above 20and 50dmas.

Singapore

STI index (STI weekly chart) appears flattish, edged down 0.52% slightly this week, closed near its three-week bottom 3100. Major technical support to watch at around 3050 level.