The CSI 300 dropped 2.6% on higher volume this week and the market is in a Rally Attempt. The coronavirus outbreak hit the market sharply as it fell 7.9% Monday, then continued to rise for a fourth consecutive trading day. The outbreak and rapid spread of the virus could put more pressure on China’s already slowing economic growth. In addition, a weaker yuan and pressure on leisure, travel, and retail stocks have worried investors. Market sentiment has been buoyed somewhat by the solid rebound in recent days, but we are keeping a close eye on strong resistance at 3,914–3,972. We expect the CSI 300 to consolidate, with its 200-DMA (~3,865) providing short-term support. A follow-through day could still occur any day going forward. The tech-heavy ChiNext index was trading constructively this week, gaining 4.57% and hitting 52-week highs. We advise investors to be rational and cautious, focusing on sectors that would benefit directly from the battle against the coronavirus or industry leaders with guaranteed growth that are immune to the epidemic.
Author: Midhun Parameswaran
US Focus
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq remain near all-time highs and above all major moving average support, despite Friday’s pullback. Distribution now stands at three days each after multiple days expired this week.
European Focus
On Thursday, the Stoxx 600 ended the day 4% above last Friday’s close and remained in a Confirmed Uptrend. Of the 17 indices we cover, 10 are in a Confirmed Uptrend, four are in an Uptrend Under Pressure, and three in a Rally Attempt.
Global Focus Developed
Australia’s ASX All Ordinaries Index was flat this week and is trading 2% below its all-time highs. One distribution day expired this week. The index remains in a Confirmed Uptrend with three distribution days.
Global Focus Emerging
The CSI 300 dropped 2.6% on higher volume this week and the market is in a Rally Attempt. The coronavirus outbreak hit the market sharply as it fell 7.9% Monday, then continued to rise for a fourth consecutive trading day. The outbreak and rapid spread of the virus could put more pressure on China’s already slowing economic growth. In addition, a weaker yuan and pressure on leisure, travel, and retail stocks have worried investors. Market sentiment has been buoyed somewhat by the solid rebound in recent days, but we are keeping a close eye on strong resistance at 3,914–3,972. We expect the CSI 300 to consolidate, with its 200-DMA (~3,865) providing short-term support. A follow-through day could still occur any day going forward. The tech-heavy ChiNext index was trading constructively this week, gaining 4.57% and hitting 52-week highs. We advise investors to be rational and cautious, focusing on sectors that would benefit directly from the battle against the coronavirus or industry leaders with guaranteed growth that are immune to the epidemic.
Global Focus Frontier
National Bank of Kuwait is the leading banking group in Kuwait in terms of assets, customer deposits, and customer loans and advances. Its strong leadership position across its product offerings will pave the way for its future growth.
China A Shares
The CSI 300 rose 3% this week on higher volume. The market remains in a Confirmed Uptrend with two distribution days. Boosted by better-than-expected factory activity in December and signs of easing monetary policy, the A-share market rallied strongly for the first three trading sessions. We remain positive on the general market, however, given the strong move higher over the last several weeks, a correction would not be unexpected. Since the Chinese economy still faces great downturn pressure and global market volatility could increase due to tensions in the Middle East, we advise remaining patient and focusing on quality ideas emerging from solid bases or rallying off key levels of support. Also consider trimming positions in ideas that are extended 20% or more above buy points. The CSI 300 broke above 2019’s high of 4,126 and is expected to consolidate. We are looking for the next level of resistance at 2018’s high of ~4,403 and the next level of support at the 50-DMA (~3,940) if immediate support at ~4,120 fails.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to trend constructively into higher highs. Both indices found support off their respective 10-DMA on Friday, closing off session lows. The distribution count remains low with two days expiring next week.
European Focus
On Thursday, the Stoxx 600 closed 0.93% higher and was flat compared with last Friday’s close. Today, the Stoxx 600 is losing 0.94% as investors assess an escalation in the U.S.-Iran tensions.
Global Focus Developed
Australia’s ASX All Ordinaries Index was down 1.17% and breached its 50-DMA this week. The index added one distribution day, taking its total to six. It remains in a Confirmed Uptrend.
