Wholesale data disappointed the markets with data coming in at 0.1% higher than expected. Markets reacted and started selling. It tried to recover during the day but still ended down after a good fight.
With two key data to look out for, markets this week might be slighted muted as it awaits the data.
Two key data are CPI (Consumer price index) on Tuesday, If this comes out higher than expected, we might see more sell down as hopes for a smaller rate hike on Wednesday might be diminished.
And on Wednesday, Fed will decide if it will do a 0.5% or 0.75% rate hike if it goes with a 0.5% hike, market should move up for a year end rally. Markets will also look for clues if Fed will start pivoting and start slowing rate hike to even 0.25% for the next round of meeting. This could also help add fuel to the recent rally. Key resistance for S&P500is around 4080 and a break above that could see S&P500 move up to 4250.
STI
Bingo! STI came down to our downside target of 3224 as mentioned last week.
Overall ,our straits times index is trading in a side ways movement with the immediate support being at 3222 while the upper resistance is at 3303. If we break the support of 3222, we might see further downside to 3177. With two key data to look out for, markets this week might be slighted muted as it awaits the data. With the negative close on Wall Street, we might see a negative opening first then fight her way through the day. As big data is coming out this week, we prefer to go lighter for the week before re-entering as it could shape the week after that.
HSI
The Hang Seng Index is on steroids! After a slight pullback it continues to march on towards our 20k target! We could see it tip over the 20k before any retracement as traders and investors who fear missing out continue to buy in on any dips. We would prefer some pullback now as the 20k could act as a psychological level. Although we’re still far from the top, we do hear clients telling us aiya, miss already! We still feel there is good opportunity in the China/ Hong Kong market and we’re just getting started only!
As usual, if you need to talk, we’re here, just a message away.
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Yours
Humbly
Kelwin& Roy
