The CSI 300 gained 2.29% on lower and above average volume this week. The market was shifted to a Confirmed Uptrend on a day four follow-through Monday. The index breached its 5-DMA (~4,943, +0.4%) with next support at July 28’s low (~4,664, -5.2%). Immediate resistance is at the 21-DMA (~5,005, +1.7%). July’s official manufacturing PMI was 50.4, below the previous 50.9 and consensus of 51.1. Private Caixin manufacturing PMI dropped to 50.3, a low since April 2020, from 51.3. Regulatory concerns emerged from the education sector and spread as reports from state media rattled sentiment, targeting online gaming, liquor, e-cigarettes, and infant formula. Defense stocks led the gains on improving earnings supported by rising demand from the country’s militarybuilding activities, with a boost from the Biden administration’s arms sale to Taiwan. Auto stocks continued outperforming on strong earnings and sales numbers, with Biden’s EV policy as a new catalyst. Health care led the losses on concerns about centralized procurement of medical equipment amid resurging domestic COVID cases. Upward momentum remained weak. We would like to see the CSI 300 hold or trade around the 5-DMA to be constructive. Investors should stay patient amid increasing volatility on earnings and headlines. Focus on stocks with sound fundamentals and strong technical profiles. Inflation and financial data will be released next week
Author: Midhun Parameswaran
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq closed the week at or near new highs and above all major moving averages including near-term support along the 10- and 21-DMA. Both indices avoided distribution this week, keeping the count at six and three, respectively, with two days expiring on the S&P 500 next week.
European Focus
On Thursday, the Stoxx 600 closed 1.72% above last Friday’s close. We upgraded France and Belgium to a Confirmed Uptrend after both the indices made new highs. Currently, 10 indices are in a Confirmed Uptrend and seven are in an Uptrend Under Pressure. The average distribution day count stands at 5.53.
Global Focus Developed
Australia’s ASX All Ordinaries Index gained 1.9% this week. The index is trading close to its 52-week high and has immediate support along its 21-DMA (-1.6%). It is in a Confirmed Uptrend and has five distribution days. Two distribution days expire next week.
Global Focus Emerging
The CSI 300 gained 2.29% on lower and above average volume this week. The market was shifted to a Confirmed Uptrend on a day four follow-through Monday. The index breached its 5-DMA (~4,943, +0.4%) with next support at July 28’s low (~4,664, -5.2%). Immediate resistance is at the 21-DMA (~5,005, +1.7%).
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 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.
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.
