The CSI 300 gained 0.33% on higher and above average volume this week. The market remains in an Uptrend Under Pressure with six distribution days. The index regained its 5-DMA (~4,840, -0.1%) but faced persistent resistance at the 21-DMA (~4,888, +0.9%). Support lies at July 28’s low (~4,664, -3.7%) followed by July 2020’s low (~4,500, -7.1%). August’s manufacturing PMI fell further, with official data slowing to 50.1 from 50.4, missing consensus of 51.2, and Caixin data falling to 49.2 from 50.3. Power stocks outperformed on expectations of an electricity price hike, and investors were revaluating some companies expanding into clean energy businesses. Cyclical stocks were mixed after a volatile week, with mining and steel stocks ending higher and chemical and non-ferrous companies closing lower. Semiconductor, auto, and defense retreated. Health care weakened further to hit a low since July 2020. Sentiment, hurt by intensive regulation, remained weak, but expectations of policy support rose following the slowing domestic economy. The market was volatile and highly mixed with strong sector rotation. Inflation, financial, and trade data will be released next week. We recommend investors stay patient and watch macro policy signals and regulatory intentions. Be selective and focus only on quality stocks.
Author: Midhun Parameswaran
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq made new all-time highs for a second straight week, closing above 10- and 21-DMA support while also avoiding distribution. The overall trend remains constructive, though the S&P 500 is now approaching its upper channel line which has risen above 4,600. The distribution day count stands at one and two, respectively, with one day expiring on the Nasdaq next week.
European Focus
On Thursday, the Stoxx 600 closed 0.49% above last Friday’s close. Norway was again downgraded to an Uptrend Under Pressure. Of the 17 indices we cover, five are in an Uptrend Under Pressure, including the U.K. and France, and the rest are in a Confirmed Uptrend.
Global Focus Developed
Australia’s ASX All Ordinaries Index gained 0.9% this week. The index is trading along its rising 21-DMA and close to its 52-week high (+1%). It is in a Confirmed Uptrend and currently has four distribution days. It added one distribution day this week, offsetting the expiry of one distribution day.
Global Focus Emerging
The CSI 300 gained 0.33% on higher and above average volume this week. The market remains in an Uptrend Under Pressure with six distribution days. The index regained its 5-DMA (~4,840, -0.1%) but faced persistent resistance at the 21-DMA (~4,888, +0.9%). Support lies at July 28’s low (~4,664, -3.7%) followed by July 2020’s low (~4,500, -7.1%).
Global Focus Frontier
Ho Chi Minh City Development Joint Stock Commercial Bank (HD Bank) is one of the top banks in Vietnam and is a constituent of the VN30 Index. Its industry-leading growth and key financial ratios, along with its exposure to the consumer finance industry, will drive its growth.
China A Shares
The CSI 300 ended 1.21% higher on slightly higher and above average volume this week. The market remained in an Uptrend Under Pressure with four distribution days. The index tested resistance at its 21-DMA but pared early-week gains to close below the short-term 5- (~4,850, +0.5%) and 21-DMA (~4,907, +1.7%). Support lies at July 28’s low (~4,664, -3.4%) followed by July 2020’s low (~4,500, -6.8%). China’s central bank injected a net of RMB 120B into the banking system via three reverse repos during the week. Industrial profit growth fell to 16.4% y/y in July, a low since November 2020. Expectations of policy support increasing as the domestic economy continued to slow. Cyclical mining, non-ferrous and steel stocks hit yearly highs on strong earnings and improving outlook amid tight supply. Solar and chemical companies also remained strong. Financial and real estate stocks retreated from last week’s bounce and health care kept falling. The market was volatile and news-sensitive amid persistent regulatory concerns and busy earnings. The U.S. Federal Reserve’s Jackson Hole meeting was also watched for cues about bond purchase tapering. We are leaning toward a wait-and-see attitude and recommend investors stay patient. Be selective and focus only on quality stocks with sound fundamentals and strong technical profiles.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq are trading at or near all – time highs with leadership expanding across multiple sectors and market caps. Support is at the rising 10-and- 21-DMAs ( S&P 500: 4,469, Nasdaq: 14, 809). The distribution day count stands at three and two, respectively, with two expiring on the S&P 500 next week
European Focus
On Thursday, the Stoxx 600 ended 0.33% above last Friday’s close. Of the 17 indices we cover, 12 are in a Confirmed Uptrend and five in an Uptrend Under Pressure. This week, we upgraded Portugal to a Confirmed Uptrend after the index reclaimed its prior rally high.
Global Focus Developed
Australia’s ASX All Ordinaries Index gained 0.5% this week. The index regained its 21-DMA after briefly testing support at the level last week. It is trading 2% below its 52-week high. The index is in a Confirmed Uptrend and currently has four distribution days, after adding one this week. One distribution day will expire next week.
