The CSI 300 declined 5.46% on higher and above average volume this week. The market was shifted to a Rally Attempt Friday after being downgraded to a Downtrend on a sharp selloff Monday. The index remains pressed by its short- and long-term moving averages. Immediate resistance lies at the 5-DMA (4,820, +0.2%) followed by the 21-DMA (~5,041, +4.8%). January- June industrial profits increased 66.9% y/y (83.4% in May), up 45.5% compared with the same period in 2019 with two-year average growth of 20.6%. Investors were digesting the newlyreleased rules banning for-profit tutoring in core school subjects, and a resurgence of domestic COVID cases also dampened risk appetite. Consumer stocks remained weak, dragged by liquor producers and COVID-affected tourism companies and hotels. Real estate and financial stocks were also among the top losers. Semiconductor and clean energy (solar and wind power) led the gains on robust outlook and consistent policy support. Telecommunication, steel, and EV-related non-ferrous stocks were also strong. The index rallied off weekly session lows but was still weak. We advise investors to stay cautious before more positive signs. Watch signals from key policy meetings and major economic data. Adopt a selective approach ahead of Q2 earnings. Focus on stocks with sound fundamentals and avoid chasing highs.
Author: Midhun Parameswaran
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq traded relatively flat for the week, remaining within 1% of a new high and above near-term support along the 21- DMA. The longer-term lower end of support remains the rising 50-DMA on both indices. Upside resistance is still along the rising upper channel lines which is above 4,500 on the S&P 500 and above 15,300 on the Nasdaq. The distribution day count stands at six and three, respectively, with no expiration next week.
European Focus
On Thursday, the Stoxx 600 ended 0.50% above last Friday’s close. Of the 17 indices we cover, eight are in a Confirmed Uptrend and nine in an Uptrend Under Pressure. This week, we upgraded the Stoxx 600, Luxembourg, and the Netherlands to a Confirmed Uptrend after they reclaimed their prior rally high.
Global Focus Developed
Australia’s ASX All Ordinaries Index declined 0.1% this week. The index is trading close to its 52-week high and has immediate support along its 21-DMA. It is in a Confirmed Uptrend and has five distribution days after adding one this week.
Global Focus Emerging
The CSI 300 declined 5.46% on higher and above average volume this week. The market was shifted to a Rally Attempt Friday after being downgraded to a Downtrend on a sharp selloff Monday. The index remains pressed by its short- and long-term moving averages. Immediate resistance lies at the 5-DMA (4,820, +0.2%) followed by the 21-DMA (~5,041, +4.8%).
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 fell 0.11% on lower but still above average volume this week. The market remains in an Uptrend Under Pressure with four distribution days. The index continued to consolidate around the 200-DMA (~5,120, +0.6%) with no clear support until May’s low of ~4,900 (-3.7%). The index faces next resistance at 100-DMA (5,133, +0.9%), 21-DMA (~5,140, +1.0%), and 50-DMA (~5,180, +1.8%). The loan prime rate, the country’s key benchmark lending rate, was unchanged in July for the fifteenth consecutive month. Basic Material and Industrial stocks led the market. Steel stocks rallied due to expectations of strong corporate earnings. EV and related sectors such as nonferrous metals and automobiles rallied. Military stocks also gained strongly. Consumer Staple and Health Care retreated sharply. The index has been consolidating around the tight area of 5,000– 5,200 with daily turnover mostly above RMB 1T since June. We advise investors to stay cautious in the highly volatile market with very quick sector rotation. Adopt a selective approach and pay attention to Q2 earnings. Focus on stocks with sound fundamentals and avoid chasing highs.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq rallied strongly off 50-DMA support early this week before gapping back to new all-time highs on Friday. Both are now pushing back towards their respective upper channel lines which are above 4,500 on the S&P 500 and 15,100 on the Nasdaq. Support is again the rising 10- and 21-DMA. The distribution day count declined to four and three, respectively, with no further expiration for two weeks
European Focus
On Thursday, the Stoxx 600 ended 0.40% above last Friday’s close. Of the 17 indices we cover, five are in a Confirmed Uptrend and 12 in an Uptrend Under Pressure. This week, we downgraded the Stoxx 600 and Belgium to an Uptrend Under Pressure
Global Focus Developed
Australia’s ASX All Ordinaries Index gained 0.5% this week. The index closed at a 52-week high. It is in a Confirmed Uptrend with five distribution days after adding one this week. One distribution day will expire next week.
