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%).
Author: Midhun Parameswaran
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 gained 0.5% on much higher and 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 (~5,110, +0.3%), with no clear support until May’s low at ~4,900 (-3.8%). The index faces resistance at the 21-DMA (~5,140, +0.9%), 100-DMA (~5,150, +1.1%), and 50-DMA (~5,170, +1.5%). Q2 GDP grew 7.9% y/y, weaker than expectations of 8.4% y/y. June retail sales, industrial production, and fixed asset investment data were stronger than expected. Trade data came in stronger than expected in June, with U.S. dollar exports up 32.2% y/y (versus consensus of 21.4% y/y and the previous reading of 27.9% y/y) and U.S. dollar imports up 36.7% y/y (versus consensus of 26.2% y/y and the previous reading of 51.1% y/y). Cyclical sectors such as Steel, Energy, and Chemical led the market. Auto, Agriculture, and Semiconductor stocks lagged. Turnover stayed high, more than RMB 1T for twelve consecutive sessions. We advise investors to be 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 pulled back to their respective 21-DMA to close the week, with the Nasdaq closing just under that level of nearterm support. Should weakness persist, the next level of support on both indices is the rising 50- DMA which may coincide with the prior breakout highs. The distribution day count increased this week to five each, however, two are expiring on the S&P 500 and three on the Nasdaq next week.
European Focus
On Thursday, the Stoxx 600 closed 0.32% below last Friday’s close. We made no changes to the market status this week, but upgraded Sweden to a Confirmed Uptrend and downgraded Italy, Germany, and France to an Uptrend Under Pressure last week. The average distribution day count is elevated at 6.53. Out of the 17 indices we cover, eight including the Stoxx 600 are in a Confirmed Uptrend, while the remaining nine are in an Uptrend Under Pressure.
Global Focus Developed
Australia’s ASX All Ordinaries Index gained 1.1% this week. The index retook its 21-DMA and is trading slightly below its 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.
Global Focus Emerging
The CSI 300 gained 0.5% on much higher and 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 (~5,110, +0.3%), with no clear support until May’s low at ~4,900 (-3.8%). The index faces resistance at the 21-DMA (~5,140, +0.9%), 100-DMA (~5,150, +1.1%), and 50-DMA (~5,170, +1.5%).
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 0.23% on higher and above average volume this week. The market remains in an Uptrend Under Pressure with the number of distribution days decreasing to four. The index traded around the 200-DMA (5,095, +0.5%), with no clear support until May’s low of ~4,900 (-3.3%). The index faces resistance at the 21-DMA (~5,150, +1.6%), 50-DMA (~5,170, +2.0%), and 100-DMA (5,180, +2.2%). The central bank announced after market close Friday that financial institutions’ deposit-reserve ratio will decrease 0.5pct to 8.9% on July 15, releasing RMB 1T. June liquidity data was optimistic. Social financing was RMB 3.67T, while M2 rose 8.6%, both beating consensus and May’s readings. CPI and PPI rose 1.10% and 8.80%, respectively, both slowing from May. June’s Caixin Service PMI was 50.3, the lowest in 14 months. We noticed capital clustered in semiconductor and EV stocks recently, with Basic Material and Technology leading. Consumer Staple retreated sharply, mainly due to large-cap food and beverage stocks. Health Care lagged, dragged down by CRO stocks due to stricter requirements for clinical trials. We advise investors to be cautious as the index lost support at all its moving averages. Be selective of stocks with sound fundamentals in the highly volatile market.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq remain at all-time highs, continuing to hold trend above all major moving averages despite relatively flat trade on the week. Near-term support remains the 10- and 21-DMA. The upper channel line on the S&P 500 is now rising towards 4,500. The distribution day count stands at four and three, respectively, with no expiration next week.
