Al Rajhi Bank is world’s leading Islamic bank with total assets of SAR 356B. The bank continues to grow by expanding its loan and deposit market share.
Author: Sandeeep N
China A Shares
The CSI 300 gained 4.9% for the week on increased volume. We upgraded the market to a Confirmed Uptrend after it rose 3% on heavy volume and retook its 50-DMA. The number of distribution days fell to two. U.S. President Trump and Chinese President Xi announced they will meet at the G20 next week, lifting markets and spurring hopes for a trade truce. Major stock indexes rose sharply this week, with the Shanghai Composite index and CSI 300 regaining their 50-DMA and the Shenzhen retaking its 100-DMA. The CSI 300 is trading 1.5% above its 50-DMA, the next level of support, and faces resistance along the gap above (~3,885). The RMB recovered against the U.S. dollar as the U.S. Federal Reserve signaled an interest rate cut. Our conviction has increased and we recommend gradually buying actionable growth ideas as they break out from sound bases or looking for aggressive entries on high conviction names as they break through their 50- or 200-DMA. Meanwhile, stay cautious, as the market is waiting for further clarity on U.S.-China talks.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 made a new all-time high this week, while the Nasdaq regained its 50-DMA and is now trading less than 2% off all-time highs. The 21-DMA on both indices is set to cross above the 50-DMA and will take over as our primary level of near-term support next week. The distribution day count remains at zero.
European Focus
On Thursday, the Stoxx 600 closed 2% above last Friday’s close and is in a Confirmed Uptrend. During the week, we moved the Stoxx 600, the U.K., Italy, Portugal, Spain, and Belgium to a Confirmed Uptrend from a Rally Attempt. Of the 17 indices we cover, 11 are in a Confirmed Uptrend, four are in an Uptrend Under Pressure, and two are in a Rally Attempt.
Global Focus Developed
Australia’s ASX All Ordinaries Index was up 1.52% this week.
The index added one distribution day, taking its total to three. It
remains in a Confirmed Uptrend.
Global Focus Emerging
The CSI 300 gained 4.9% for the week on increased volume. We upgraded the
market to a Confirmed Uptrend after it rose 3% on heavy volume and retook
its 50-DMA. The number of distribution days fell to two. U.S. President Trump
and Chinese President Xi announced they will meet at the G20 next week,
lifting markets and spurring hopes for a trade truce. Major stock indexes rose
sharply this week, with the Shanghai Composite index and CSI 300 regaining
their 50-DMA and the Shenzhen retaking its 100-DMA. The CSI 300 is trading
1.5% above its 50-DMA, the next level of support, and faces resistance along
the gap above (~3,885). The RMB recovered against the U.S. dollar as the U.S.
Federal Reserve signaled an interest rate cut. Our conviction has increased and
we recommend gradually buying actionable growth ideas as they break out from
sound bases or looking for aggressive entries on high conviction names as they
break through their 50- or 200-DMA. Meanwhile, stay cautious, as the market is
waiting for further clarity on U.S.-China talks.
Global Focus Frontier
Al Rajhi Bank is world’s leading Islamic bank with
total assets of SAR 356B. The bank continues to grow
by expanding its loan and deposit market share.
China A Shares
The CSI 300 rose 2.53% for the week on trading volume in line with the 50-day average. It
remains in an Uptrend Under Pressure with a distribution day count of three. Driven by the
policy that special bond funds can be used as capital for major projects, the index rallied more
than 3% on Tuesday, followed by a three-day losing streak, which indicated that short-term
policy stimulus may not be sustainable; the index is expected to continue to consolidate. The
CSI 300 is testing the 100-DMA, which provides the next immediate support. If the index
cannot hold up, the next support is at ~3,556. The previous two highs of ~3,723 and ~3,745
provide the next resistance. Published after Friday’s close, China’s key macroeconomic data for
May continued to weaken. May’s industrial production and fixed investment growth continued
to fall, showing that the economic downturn pressure has increased. Blended with uncertainty
about trade friction, we believe market volatility and divergence will further increase. We
recommend staying cautious and being selective to areas of strength. Focus on industry leaders
with steady growth, policy benefits, and strong growth certainty.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to
consolidate gains, trading relatively flat over the last several sessions. We have yet to see meaningful
price progression since last week’s follow-through day that would give us more conviction in the
current rally. Further, we would like to see the Nasdaq regain its 50-DMA which continues to act
as resistance.
European Focus
On Thursday, the Stoxx 600 was up 0.14%, with only one down day
in the week (Wednesday). This week has been very constructive, and the
index was up 0.74% on a weekly basis as of Thursday. Today, the index is
facing another down day and is trading 0.44% below yesterday’s close.
