Stocks Rise on “Soft Landing” Hopes

Weekly Wrap Content for the week of Jan 27:

1. Week 4 major indexes performance;

2. Week 4 US sector indexes performance;

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

U.S.

For the week ended Jan 27, 2023, major U.S indexes resumed their winning streak, as investors appeared to welcome some hopeful signals that the economy might skirt a recession in 2023. Equities rose again last week, the third weekly gain in the last four, guided by a slew of corporate earnings announcements and fresh economic readings. 2023 is off to a strong start, stocks are up roughly 6% so far this year. Strong January returns have often been accompanied by positive full year returns. Refer to major indexes’ weekly performance tables below.

Key highlights for the year and outlook:       

1.    Bad years are typically followed by good ones as data shows. The S&P 500 declined 19.4% in 2022 (excluding dividends). Since 1950, there have been four previous calendar years in which the stock market fell more than 15%. The market rose, on average, 12.9% in the following year. 

2.    US economy overall finished 2022 on a fairly solid note, with GDP growing by 2.9% annualized pace in the fourth quarter, slightly better than expected. Consumer spending weakened from the previous period but remained positive. 

3.    Fed expected to establish a more accommodative policy stance in 2023. Walls Street Journal reporter cited recent comments from Fed governor Christopher Waller that he would support a quarter-point (0.5%) rate increase at the Fed’s next two-day policy meeting concluding Feb 1. 

4.    Earnings see hit from slowing economy. With companies representing roughly 20% of the S&P 500 Index market capitalization reporting results. Microsoft, the second-most heavily weighted stock in the index, fell sharply after the company reported a larger-than-expected decline in earnings and a slump in revenues that it expects to continue into 2023. Other weak performers included IBM and Intel.

SPX sectors in play

Nine out of 11 sectors within the SPX index closed positive for the week. Consumer discretionary stocks(XLY) were especially strong, thanks partly to a big jump in Tesla shares over the week following a favorable outlook from CEO Elon Musk. The typically defensive consumer staples(XLP), health care(XLV), and utilities(XLU) segments lagged. Relatedly, value stocks underperformed growth shares. Refer to below SPX sector indexes weekly performance table.  

Indexes technical levels

DJI index has been trapped(sideway consolidation) within its four-week trading range, Nasdaq has had a bullish breakout from its long-term downtrend line drawn from record high in 2021, it also had a bullish breakout from its double bottom weekly chart formation in the week, signalling growth stocks are coming back in play. SPX index- the most widely watched market barometer, also successfully breakout from its long term downtrend line drawn from 2021, it also crossed above its 250dma for the first time Apr 2022.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Financial markets in mainland China were closed for the Lunar New Year holiday, which started January 21, and will reopen on Monday, January 30.

The Hong Kong stock exchange resumed trading on Thursday, and the benchmark Hang Seng Index gained 2.96% for the holiday-shortened week. China’s domestic activity picked up significantly during the weeklong holiday, fueling optimism about a faster-than-anticipated economic recovery as people enjoyed the break from pandemic restrictions. Approximately 95.9 million trips were taken via road, rail, air, and waterways in the first four days of the holiday, or a daily average of 24 million trips compared with 18.6 million over the 2022 break, according to Ministry of Transport data.

SSE weekly chart

.HSI weekly chart

Technically, the Hang Seng Index closed 6^th week consecutive up, hit its highest level since Feb 2022-recovered its loss one year ago. Still plenty of room to upside for further rebound.

Singapore

STI index rallied and had a bullish breakout in the week finally- after 10 weeks a sideway consolidation in a tight trading range. It reached a level highest since Apr 2022. Next level to watch is previous high 3466 in Mar 2022.

STI weekly chart

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

Stocks Continue Good Start to 2023

Weekly Wrap Content for the week of Jan 13:

1. Week 2 major indexes performance;

2. Week 2 US sector indexes performance;

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

U.S.

For the week ended Jan 13, 2023, major U.S indexes recorded a second consecutive week of gains as investors weighed key inflation data and quarterly earnings reporting season kicked off in earnest on Friday. The Nasdaq Composite and growth-oriented sectors outperformed, helped by rebounds in some mega-cap technology-related names, including Amazon.com, Tesla, and Microsoft. Latest CPI data released on Thursday which under investors’ spotlight, decelerated further for 3^rd consecutive month, eased inflation sets the stage for the Fed to slow down the pace of rate hikes further.

U.S markets will be closed for a public holiday on Monday 16 Jan. Refer to major indexes’ weekly performance tables below.

Key highlights for the year and outlook:       

1.    December inflation data on Thursday fell as per consensus expectation. Dec CPI marking the smallest annual increase since Oct 2021. Annually, CPI was up 6.5%, decelerating from November's 7.1% pace. Market probabilities for a quarter-point (0.25%) hike when Fed meets on 1 Feb jumped to 97% after the CPI reading. 

2.    Jobs remains healthy. The weekly jobless claims fell to a three-month low of 205k, while the University of Michigan’s preliminary reading of consumer sentiment jumped much more than expected and reached its highest level since April.

SPX sectors in play

Eight out of 11 sectors within the SPX index closed positive for the week. The Nasdaq Composite and growth-oriented sectors outperformed, helped by rebounds in some mega-cap technology-related names, including Amazon.com, Tesla, and Microsoft. Consumer Discretionary(XLY) and Technology(XLK) sectors outperformed and  Consumer staples(XLP) shares lagged. Financials(XLF) stocks such JPMorgan Chase, Wells Fargo, and Bank of America beat consensus expectations when they released earnings Friday morning, but cautious outlooks from the banking giants caused shares to fall in early trading. Refer to below SPX sector indexes weekly performance table.  

Indexes technical levels

Technically, the three major indexes closed up 2^nd week in a row in 2023. DJI was the strongest one, rebounded near to its latest three-month high, technical bullish. SPX closed 2^nd week up in a row, approaching its major downtrend line drawn from Jan 2022, the Nasdaq index still some more room to its major downtrend line. Click to view below the three major indexes’ weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China and HK stocks rose as a softer-than-expected U.S. inflation print and optimism about the post-pandemic reopening outlook boosted sentiment. The Shanghai Composite Index gained 1.19% and the blue chip CSI 300 Index advanced 2.35%, a four-month high. The Hang Seng Index added 3.56%, reached six-month high.

SSE weekly chart

.HSI weekly chart

Hopes that domestic demand will recover in the coming months rose after Beijing abandoned its zero-COVID policy in December and officials stepped up measures to support the struggling property sector. Economists polled by Reuters projected a swift rebound for China’s economy once infections peak and forecast 4.9% growth this year versus an estimated growth pace of about 3% in 2022.

On the trade front, China’s exports fell 9.9% in December from a year ago as global demand softened and rising infections disrupted activity after the government rolled back pandemic restrictions.

Technically, the Hang Seng Index closed 4^th week consecutive up, has formed a “V-shap” rebound on its weekly chart, though still plenty of room to upside, it fell more than 50% in Feb-Oct 2022 period. Both the SSE and .HSI indexes closed above their respective major moving averages 20, 50 and 200d, which are bullish signs.

Singapore

STI index had spiked above its EIGHT weeks sideway consolidation trading range between 3314-3222 area on Monday but fell back and traded within the range throughout the week. While the index is trading above all major moving averages (20,50, and 200MAs), it’s expected market will move higher from here.

STI weekly chart

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

2023 Begins on a Positive Note, Thanks to Friday’s Rally

Weekly Wrap Content for the week of Jan 6:

1. Week 1 major indexes performance;

2. Week 1 US sector indexes performance;

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

U.S.

For the first week of 2023, major U.S indexes closed with a gain to start the year, as markets rallied on Friday following an encouraging jobs report. The S&P 500 Index also continued to move within a relatively tight band compared with most of 2022, with the index staying between 3,764 and 3,906 since December 16. Refer to major indexes’ weekly performance tables below.

Key highlights for the year and outlook:       

1.    Labour market remains resilient. Latest nonfarm payroll reported on Friday shows there were 223k jobs added in Dec, the smallest increase in two years but above expectations. Unemployment rate also moved back down to 3.5% in Dec, matching a 50-year low. Several trends are signaling that the labor market is likely to soften, which some analysts think will produce a milder downturn. 

2.    Both services and manufacturing activity fall—but so does inflation. Data reported on Friday the ISM’s index of services sector activity fell to 49.6, well below consensus and into contraction territory (below 50) for the first time since May 2020, as new orders slowed sharply. 

3.    Fed meeting minutes released on Tuesday seemed dampened an earlier rally.

SPX sectors in play

10 out of 11 sectors within the SPX index closed positive for the week. Communication services(XLC) stocks led the gains, helped by rallies in Charter Communications, Netflix, and Facebook parent Meta Platforms. Defensive stocks in  Health Care(XLV) sector lagged. Refer to below SPX sector indexes weekly performance table.  

Indexes technical levels

Technically, the three major indexes closed up in the first week of the year. DJI closed highest in four weeks, SPX closed highest in three weeks and Nasdaq closed new high in two weeks. Trading volumes were subdued over most of the week, remaining below 2022 averages. The SPX Index also continued to move within a relatively tight band compared with most of 2022, with the index staying between 3,764 and 3,906 since December 16. Click to view below the three major indexes’ weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China and HK stocks rose amid reports that Hong Kong would reopen its border to mainland China and that Beijing was considering relaxing curbs on borrowing for the ailing property sector. The Shanghai Composite Index gained 2.21% and the blue chip CSI 300 Index added 2.82%, marking its biggest gains in weeks.

SSE weekly chart

.HSI weekly chart

Hopes of further support for property developers rose following news that Beijing may ease the stringent “three red lines” policy that featured prominently in the government’s crackdown on the real estate sector in 2020, Bloomberg reported, citing unnamed sources. Separately, the People’s Bank of China announced that first-time homebuyers would be offered lower mortgage rates if new home prices fall for three consecutive months.

The changes mark a significant shift in China’s real estate policy, following a series of measures introduced since November to restore confidence in a sector that accounts for almost a quarter of the nation’s economy.

December PMI slumps. the official PMI data for manufacturing and non-manufacturing fell in December. Overall, the composite PMI fell to 42.6 from 47.1 in November, marking the biggest decline since February 2020, before the coronavirus outbreak.

Technically, the Hang Seng Index had a decisive bullish breakout from its four-week consolidation range this week, also had a bullish breakout from its two-year downtrend line, the index closed above all its major averages 20/50 and 200dma, expected further upside recovery. The SSE index closed just beneath its 200dma and also its 1-year long downtrend line, a breakout above 200dma would be a bullish sign and a sign of further rebound.

Singapore

STI index closed 0.78% higher for the week but still consolidating within its EIGHT weeks tight trading range between 3314-3222 area, while trading above all major moving averages (20,50, and 200MAs) which is bullish bias.

STI weekly chart

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

A Wrap On a Tough 2022

Weekly Wrap Content for the week of Dec 30:

1. Week 52 major indexes performance;

2. Week 52 US sector indexes performance;

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

U.S.

For the final week of 2022, the U.S equities closed out the year in the red, and all three major indexes registered solid losses on a yearly basis. The stock market posted its worst yearly decline since 2008. Trading remained subdued in the final days of the year as volumes continued to be on the lighter side. A highly publicized wave of flight cancellations pushed shares of Southwest Airlines sharply lower when trading opened Tuesday, but the airline recaptured some ground as the week progressed. Bond trading closed early on Friday, and both equity and bond markets were scheduled to be closed on Monday in observance of the New Year’s Day holiday. Refer to major indexes’ weekly performance tables below.

2022 is a year that many investors may want to forget, or at least put behind them. The S&P 500 was down modestly last week and ended the year down about 20%.

Key highlights for the year and outlook:       

1.    For equity and balanced investors, 2022 brought the steepest losses since 2008 great financial crisis. For bond investors, this was the worst year on record for the Barclay's U.S. Aggregate Bond Index since it began over 45 years ago in 1976, down about 15%. Both equities and bond performed badly, you had few places to hide in 2022. 

2.    Though there were limited places for investors to hide this year across equities and bonds. The energy sector perhaps was one exception. It had its best year on record, with the S&P energy sector(XLE) up over 57%( refer to below SPX sector performance). 

3.    Value stocks outperformed growth by the largest margin since 2001. Ove rthe past decade, growth outperformed value for most years, and especially through the pandemic period. This was due to low interest rates. As interest rates rose rapidly in 2022, fed rate now around 4.3% from about 0.5% previously, higher-valuation assets, including growth stocks were under great selling pressure, and investors moved towards more defensive value sectors. 

4.    Cheers to a brighter 2023. While 2022 has been a challenging year for investors, and we still facing headwinds in the forms of central-bank tightening and an economic slowdown ahead, it’s expected the bear market should conclude in 2023. Good news for investors is this: Throughout history, every bear market has 1) ended and 2) led to a bull market that is longer and stronger than the bear market that preceded it.

SPX sectors in play

Three out of 11 sectors within the SPX index closed positive for the week. Financials(XLF) and Energy stocks(XLE) outperformed, Consumer staples(XLP) and materials(XLB) shares fell the most. Refer to below SPX sector indexes weekly performance table.  

For the year 2022, Defensive sectors were relative outperformers in 2022. Aside from energy, the three top-performing S&P 500 sectors for the year were consumer staples, health care, and utilities. These are traditionally considered "recession proof" sectors that can hold up better during periods of economic slowdown.

Source: FactSet, S&P 500

This chart shows the energy sector outperforming this year while growth sectors like Tech have been notably laggards.

Indexes technical levels

Technically, the three major indexes down for the week modestly and down for the year. DJI index down 8.8% yoy, SPX down 19.4% and Nasdaq down 33.1%. Click to view below the three major indexes’ weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stocks rose as Beijing continued to ease coronavirus pandemic restrictions despite a surge in cases. The Shanghai Composite Index gained 1.4% and the blue chip CSI 300 Index added 1.13%, reversing several weeks of losses. In Hong Kong, the Hang Seng Index added 1%. For the whole year 2022, SSE was down 15.1% and Hang Seng Index(.HSI) was down 15.5%, performance about the same.

SSE weekly chart

.HSI weekly chart

Chinese officials scrap quarantine measures despite rising cases. The National Health Commission (NHC), China’s health regulator, downgraded the management of the coronavirus from the highest to second-highest level starting January 8, 2023.

Many countries have tightened entry requirements for travelers from China ahead of January’s reopening. The U.S., Japan, Taiwan, India, Malaysia, and Italy introduced COVID-19 testing on arrivals from China due to concerns about the severity of the virus and lack of transparency from the Chinese government regarding the spread.

Economic activity show signs of rebound. Economic activity picked up in several cities in China where coronavirus cases have shown signs of peaking. The number of passengers using subways in Beijing, Chongqing, Chengdu, and Wuhan rose by 40% to 100% as residents start to return to normal activities. Reports also showed an increase in traffic congestion, movie sales, and air travel in some areas.

Singapore

STI index edged lower 0.2% for the week but still closed 4.09% higher for the year 2022, a remarkable performance against other peers. STI index was the only market closed up among APAC peers, its total return (including dividend) was 8.29%, handsomely outperformed MSCI Asia Pacific Index which was -17.17%.

As Chinese newspaper Zaobao reported, here’s headline STI index stocks performance for the year 2022:

Top by market Cap: 1) DBS 87.8B; 2) OCBC 55.2B; 3) OCBC 51.9B 4) SingTel 42.3B; 5) Wilmar 26.7B

Top gainers by total return: 1) YZJ Ship +107.4%; 2) Sembcorp Ind +72.9%; 3)Keppel +49.3%; 4) Jardine C&C +44.6% 5) CDL +27.2%

Top loser by total return:1) SATS -27%; 2)Keppel DC-25.3%; 3)Frasers L&C -19%; 4) MapletreeInd -13.4% 5) MapletreeLog -12.5%

Technically, the STI index still consolidating within its seven weeks tight trading range between 3314-3322 area, while trading above all major moving averages (20,50, and 200MAs) which is bullish bias.

STI weekly chart

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

Stocks end Mixed in Light Holiday Trading

Weekly Wrap Content for the week of Dec 23:

1. Week 51 major indexes performance;

2. Week 51 US sector indexes performance;

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

U.S.

For the week of Dec 23, the U.S major indexes were mixed in a week of generally quiet holiday season trading. The Dow Jones Industrial Average Index(DJI) recorded modest gains, SPX closed flat while the Nasdaq Composite(COMP) dropped nearly 2% despite recording its best daily gain since November on Wednesday. Hawkish comments from the Federal Reserve and other global central banks over the previous week continued to be a key factor weighing on markets. Some of the week’s economic signals may also have intensified fears of future rate hikes. U.S financial markets closed on Monday Dec 26 for the Christmas holiday. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:      

1.    U.S. Q3 GDP revised up. Government data released Thursday that the U.S economic growth in the third quarter was upped from 2.9% to 3.2%, boosted by upward revision of personal consumption. The U.S. economy contracted in the first half of the year with GDP declining in the first and second quarters, stoking worries of recession. The week's upward revision to third quarter GDP suggests that economic activity rebounded nicely in the second half of the year.

2.    Jobless claims surprised modestly on the downside, and continuing claims recorded their first weekly drop since Oct, which show a still resilient job market. 

3.   Yield rise, dollar index down. The US dollar dropped to its six-month low, U.S treasury rates climbed through most of the week, partly in response to actions by Japan’s central bank. Traders cited the Bank of Japan’s (BoJ) surprise decision to widen the allowed band around 10-year Japanese government bond (JGB) yields as a driver of higher U.S. rates and a steeper Treasury curve. 

SPX sectors in play

Six out of 11 sectors within the SPX index closed positive for the week. Energy stocks(XLE) outperformed as U.S. oil inventories came in well below consensus expectations. Consumer discretionary(XLY) shares performed worst, dragged lower by a steep decline in Tesla(TSLA) following the electric vehicle maker’s announcement of increased price discounts. Semiconductor(XLK) stocks also sold off on Thursday after chipmaker Micron Technology reported falling global demand. Refer to below SPX sector indexes weekly performance table. 

Indexes technical levels

Technically, the three major indexes closed mixed for the week. While DJI index rebounded after two consecutive weeks down, both Nasdaq and SPX indexes recorded their 3^rd weekly drop in a row. Nasdaq pulled back closer to its Oct/Nov low(support) level around 10300, SPX still trapped within its previous monthly price range. Click to view below the three major indexes’ weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stocks fell as a spike in coronavirus cases weighed on the country’s growth outlook. The Shanghai Composite Index was down 3.85% and the blue chip CSI 300 Index declined 3.19%. In Hong Kong, the Hang Seng Index added 0.7%.

SSE weekly chart

.HSI weekly chart

The World Bank cut its China economic growth forecasts for this year and next due to the pandemic and the country’s ongoing property market slump. The bank projected that China’s economy would grow 2.7% this year and 4.3% in 2023, down from its September forecasts of 2.8% growth this year and 4.5% in 2023.

China’s government stepped up calls to bolster the economy in 2023 following the prior week’s Central Economic Work Conference, an annual meeting in which officials discuss policy goals for the coming year.

The People’s Bank of China issued a statement confirming that it would support a recovery in consumption and guide financial institutions to back property sector mergers and acquisitions.

Technically, SSE index slumped to its six-week low for the week, closed below major moving averages 20/50 and 200dma which is bearish. While .HSI index edged higher and was consolidating around its 200dma level, appears bullish.

Singapore

STI index edged 0.52% up this week. Technically, the STI index still consolidating within its six weeks tight trading range between 3314-3322 area, while trading above all major moving averages (20,50, and 200MAs) which is bullish bias. 

STI weekly chart

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

Stocks Fell over Fears of Rising Interest and Recession

Weekly Wrap Content for the week of Dec 16:

1. Week 50 major indexes performance;

2. Week 50 US sector indexes performance;

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

U.S

For the week of Dec 16, the U.S stocks was pushed lower for a 2^nd consecutive week and to a levels last seen in early Nov, by intensified fears over rising interest rates and risk of falling into recession.  Two highly anticipated announcements during the week appeared to send sentiment in opposite directions—much higher at the start of the week and sharply lower at its end. The first was the release of the CPI before trading began on Tuesday. The second was the release of the Fed December statement on Wednesday afternoon, followed by Fed Chair Jerome Powell’s press conference, sent stocks sharply lower. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:                 

1.    Fed rate: The Fed raises interest rates by 0.50% and indicates a 5.1% peak fed funds rate. As expected, the FOMC raised rates by 0.50% at its December meeting in the week, bringing the fed funds rate to about 4.5%. In his comments, Fed Chair Powell went out of his way to say that while recent inflation data has been encouraging, inflation broadly remains elevated and well above the Fed's 2.0% target. Fighting inflation continues to remain its top priority, not the impact of higher rates on economic growth. 

2.    CPI: Consumer price index (CPI) inflation came in cooler than expected. CPI inflation data for November came in below expectations, with headline inflation of 7.1% year-over-year versus expectations of a 7.3% figure. 

3.    Retail sales for November come in weaker than expected. U.S. retail sales for the month of November came in below expectations, falling -0.6% month-over-month, versus forecasts of down 0.15%. This figure also came in well below last month's 1.3% growth. The U.S. economy is nearly 70% driven by consumption, and slowing retail sales is perhaps the first signal that consumer demand may be stalling.

 SPX sectors in play

Nearly every sector within the index recorded sharp losses with the exception of energy shares(XLE), which were supported by a partial rebound in oil prices. Consumer Discretionary(XLY) and Communication Services(XLC) sectors lagged. Telsa price dropped more than 16% this week to a new low since Nov 2021, contributed much of the consumer discretionary sector underperformance. Refer to below SPX sector indexes weekly performance table.  

Indexes technical levels

Technically, all the three major indexes closed 2^nd consecutive week down. While DJI index retreated to its downtrend line support but still above its 200dma level. SPX tested its major downtrend line intra-week and selloff, still in downtrend. Nasdaq Composite index is the weakest among the three, had downside breakout from its four-week sideways consolidation area. Click to view below the three major indexes’ weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China’s stocks fell as weaker-than-expected economic data dampened investor sentiment. The Shanghai Composite Index was down 1.22% and the blue chip CSI 300 Index declined 1.1%, reversing several weeks of gains. Remarks from Vice Premier Liu He indicating that Beijing is considering new measures to support the real estate industry lifted property sector stocks. Hang Seng Index fell 2.26%, recorded first weekly loss after two consecutive week rally.

SSE weekly chart

.HSI weekly chart

COVID lockdowns weigh on data. A trio of key economic indicators for November came in weaker than expected as pandemic-related disruptions weighed on activity. Industrial production rose by 2.2% in November from a year earlier, marking the softest growth since May, while retail sales declined by 5.9%. Fixed asset investment for the year through November also missed forecasts.

Technically, SSE index rebounded to testing its major downtrend line and traded above 200dma intra-week but unable to hold above it end of the week, closed just beneath it. While .HSI index also displays similiar pattern, tested its 200dma but closed just below it end the week.

Singapore

STI index edged lower 0.16% this week. Technically, the STI index still consolidating within its previous 4 weeks trading range between 3314-3322 area, while trading above all major moving averages (20,50, and 200MAs) which is bullish bias. Do take note of the wicks of the weekly candlesticks, which indicate selling pressure above, bearish.

STI weekly chart

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