Week Ahead: Markets Becoming Policy Driven

Week Ahead, 16 Dec 2024

Macro News:

On China markets, the same market action persists, “Buy on stimulus announcements, and sell off a day or two later”. This is the playbook for a policy-driven market. However, as China’s economic data continues to hold, if the pledged stimulus are delivered, we could see reflation of the Chinese economy. Patience is key when investing in China.

On the other hand, we too observes that US markets are also leaning toward a policy-driven dynamic, as evidenced by the recent rallies in Bitcoin and Tesla that coincided with the re-election of the US President.

We maintain a bullish outlook on the overall US market. However, we are becoming cautious as Nvidia Corp, the leader in the AI theme, appears to be forming a potential classical bearish head and shoulders pattern after facing pressure from both the US and Chinese governments.

The week ahead features a significant announcement from the US FOMC committee. As before, the US Federal Reserve Chair's commentary will likely carry more weight than the rate announcement itself, as the market widely expects another 25 basis point cut. In addition, the market will be closely watching the PCE report this week following an elevated PPI report last week.

Medium Term:

· S&P 500 (SPX): S&P 500 did not move higher for the week. We are staying cautious for this week. For index to trend towards 6,180 zone, we need S&P 500 to maintain above 6,000 level.

· Straits Times Index (STI): Index continues to be neutral and we are looking out for directional cue this week.

· Hang Seng Index (HSI): Hang Seng Index (Grey) retested 20,500 level and reversed, we expect index to trade range bound for the week as market digest recent Stimulus announcements.

Long Term:

· S&P 500 (SPX) trend remains upward

· Hang Seng Index (HSI) trend remains upward

· Straits Times Index (STI) trend neutral to upward trend.

Headlines Next Week:

- US Nov FOMC Meeting, PCE, PMI Flash, Retail Sales,

- China Home Price Index, 1-yr MLF, LPR, Ind Prod

- SG Nov NODX, Ind Prod

Disclaimers apply

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