Market update for the week of July 08, 2022

This week in the US, stocks posted modest weekly gains, reversing the negative trend of the previous week. There was a wide divergence across the major U.S. indexes, with the NASDAQ gaining (+4.6%), the S&P 500 adding (+1.9%), and the Dow rising less than 1%.

Looking deeper in the tech sector, chipmakers were among the best performers with heavyweights like AMD (AMD) and NVIDIA (NVDA) rising off their lowest levels in at least a year while the PHLX Semiconductor Index gained 6.5%, narrowing its year-to-date loss to 33.7%.

Despite high inflation, the U.S. labor market continued to post strong growth in June. The economy generated 372,00 new jobs—exceeding most economists’ forecasts—while the unemployment rate held steady at 3.6% for the fourth month in a row. Average hourly earnings rose 5.1%.

Crude oil faced pressure at the start of the week, falling past the $100.00/bbl mark to a level not seen since late April. Concerns about global growth fueled the selling on Monday and Tuesday, in turn emboldening the advance in the equity market. However, the next two days saw a bounce that lifted the energy component back above $100. WTI crude ended the week at $105.06/bbl, down $3.41 or 3.1% since last Friday.

The shortened week featured the release of the June FOMC Minutes, in which policymakers acknowledged the risk for a slowdown in growth from tighter policy and a concern that higher inflation could become entrenched if the public begins questioning the Fed's resolve. Policymakers agreed that moving to a restrictive policy stance is appropriate.

Treasuries gave back the bulk of their gains from the week before, lifting the 10-yr yield back above its 50-day moving average (3.003%). The benchmark yield increased by 21 bps to 3.10% for the week while the 2-yr yield rose 29 bps to 3.12%, inverting the 2s10s spread once again.

The U.S. Dollar Index climbed nearly 1.8% during the past week, reaching a level not seen since October 2002. The bulk of the strength took place at the euro's expense amid ongoing concerns about the impact of high energy prices on the European economy.

Next Week:

July 13

· Consumer Price Index, U.S. Bureau of Labor Statistics

· Federal budget, U.S. Department of the Treasury

July 14

· Producer Price Index, U.S. Bureau of Labor Statistics

· Weekly unemployment claims, U.S. Department of Labor

July 15

· Retail sales, U.S. Census Bureau

· Business inventories, U.S. Census Bureau

· University of Michigan Index of Consumer Sentiment, preliminary result

· Industrial production and capacity utilization, U.S. Federal Reserve

In terms of A-shares, after five weeks of continuous rise, it encountered significant pressure, and the Shanghai index fluctuated and adjusted, falling below 3,400 points. For the whole week, the Shanghai Composite Index fell 0.93%, the Shenzhen Component Index fell 0.03%, and the ChiNext rose 1.28%. The net inflow of northbound funds continued, and the weekly net inflow narrowed to 3.56 billion yuan. In terms of sectors, the sector leading the gains is pork farming, with power and utilities, power equipment and new energy among the top gainers. The sectors leading the decline were the sectors recovering from the epidemic such as hotels, catering, and aviation, mainly due to the recent spread of domestic epidemics and the pressure on interim report performance.

InHong Kong stocks, the three major indexes fluctuated and rose slightly. The Hang Seng Index closed up 0.38% to 21725.78 points, a weekly decline of 0.61%; the Hang Seng Technology Index rose 0.59% to 4808.47 points, a weekly decline of 1.27%; the Hang Seng State-owned Enterprise Index rose 0.17% to report 7551.7 points, a weekly decline of 1.5%. In terms of sectors, pharmaceutical outsourcing and green electricity concepts led the gains, while oil stocks and steel metal stocks led the decline. Southbound funds mainly flowed into discretionary consumption, industry, and essential consumption, and flowed out of information technology, financial, and energy industries.

---

Disclaimer

The content and opinions contained in this document are for reference only. Neither any information nor any opinion contained in this report constitutes a solicitation or an offer by Sinostar Asset Management Limited, to buy or sell any securities, futures, options or other financial instruments, or to provide any service or investment advice. The information on which this communication is based has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy, completeness, timeliness or validity. All expressions of opinion are subject to change without notice. In no event will Sinostar Asset Management Limited be liable or have any responsibility for loss of any kind, whether direct, indirect, consequential or incidental, resulting from the act or omission of any third party occurring in reliance upon the contents of this report even if Sinostar Asset Management Limited is aware of such act or omission at the time that it occurs. Users of this document may not reproduce, distribute, disseminate, cite, reprint or provide some or all of the content to third parties without the written permission of the Sinostar Asset Management Limited.

Sinostar Asset Management Limited reserves all rights to this document.