Savola Group is one of the leading strategic investment holding groups in food and retail sectors across MENAT (Middle East, North Africa and Turkey region).
Author: Sandeeep N
China A Shares
The CSI rose 0.27% this week on higher volume and remains in an Uptrend Under Pressure with three distribution days. China’s Caixin/Markit manufacturing PMI rose to 52.8 in July from 51.2 in June, while Caixin Service PMI in July came in at 54.1 (versus expectations of 58 and 58.4 previously), remaining in expansion territory. Chinese exports jumped 7.2% y/y in July, accelerating from a 0.5% gain in June and beating market expectations of 0.2%. Imports fell 1.4% y/y in July, missing consensus of 0.5% drop following a 2.7% rise in June. The Trump administration unveiled a plan to ban U.S. transactions with Byte Dance’s TikTok and Tencent-owned WeChat. The index trended up on early sessions as the government announced that China will build a complete industrial chain for the Beidou navigation system but the CSI 300 reversed to end with a 0.27% gain following concerns of China-U.S. tensions. Immediate support still lies at the rising 21-DMA (4,688, -0.4%), followed by the 50-DMA (~4,379, -7.0%). We expect the index to stay range-bound before it breaks above key resistance at July’s high of 4,878 (+3.6%). We recommend investors stay disciplined amid recent volatility and focus on quality names coming out of proper bases.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 continues to trend off 21-DMA support with the next level of resistance at all-time highs of 3,393 (+1.3%). The Nasdaq pulled back off all-time highs on Friday as Technology paused, while Financials, Retail and Industrials came under accumulation. The Nasdaq still closed off session lows and remains well above 10- and 21-DMA support. Distribution remains relatively low with one day set to expire on both indices next week.
European Focus
On Thursday, the Stoxx 600 ended 1.73% above last Friday’s close. Of the 17 indices that we cover, one is in a Confirmed Uptrend, 13 are in an Uptrend Under Pressure, and three in a Rally Attempt.
Global Focus Developed
Australia’s ASX All Ordinaries Index gained 1.4% this week. The index is trading 2% below its 200-DMA. It remains in a Confirmed Uptrend with three distribution days. One distribution day expires next week.
Global Focus Emerging
China’s CSI 300 rose 0.27% this week on higher volume and remains in an Uptrend Under Pressure with three distribution days.
Global Focus Frontier
Savola Group is one of the leading strategic investment holding groups in food and retail sectors across MENAT (Middle East, North Africa and Turkey region).
China A Shares
The CSI 300 rose 4.76% from Monday through Thursday this week on higher and above average volume and remains in a Confirmed Uptrend with three distribution days. The index rallied and broke above March highs of ~4,200. The next immediate resistance lies at January 2018 highs (~4,400, +1.5%). Support lies at the 50-DMA (3,960, -9.5%). June’s official PMI was 50.9, up from May’s 50.6, while Caixin’s small business PMI climbed to 51.2 in June from 50.7 in May, both better than consensus. China’s industrial firm profits rose 6.0% y/y in May, the first increase since December 2019. The index closed at a two-and-a-half-year high and showed clear signs of sector rotation. Financial and Real Estate led while long-term leaders Technology and Health Care lagged. Some ideas that deserve attention are SJF.CN, BHZ.CN, and FIN.CN. We recommend increasing risk exposure as the market has become more upbeat. Investors are advised to accumulate positions on quality stocks breaking out of solid bases and take profits in the most extended ideas such as YEP.CN and JJY.CN.
US Focus
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq held 50- and 21-DMA support respectively this week. The Nasdaq moved back into all-time highs, but on Friday reversed to close at the lows of the session and below last week’s intraday high. The S&P 500 remains the lagging index and still needs to convincingly clear above resistance between 3,155 and 3,233. With that said, the 50- and 200-DMA have converged just above 3000, which should offer a strong level of support on any pullback. Distribution went unchanged this week, holding at six and three days respectively, with one day expiring on each next week.
European Focus
After a brief period of volatility due to concerns over the second possible wave of COVID-19 cases, the market remained in positive territory. The Stoxx 600 advanced 0.8% in the first three days of the week and is gaining another 150bps today.
