Tech stocks revival amid the Fed’s Dovish tone. The Tech sector has performed relatively well during the lockdown, making Big Tech. AMZN and AAPL posted solid Earning Results, pushed the Nasdaq up less than 2% and Wall Street is on track for two straight weeks of gains. Technology stocks appreciation goes hand in hand with Dovish tone or potential Hawkish slowdown of the Fed, after US GDP 2Q22 officially recorded recession (2Q22 – 0.9% QoQ; 1Q22 -1.6% QoQ). AMZN went up after growth in loyal Amazon Prime subscribers boosts 3Q22 revenue projections. Meanwhile, AAPL managed to overcome the shortage of spare parts supply, and iPhone demand continued. Meanwhile, the increase in US Employment Cost Index 2Q22 +1.3% (1Q22 +1.4%); and Personal Spending June +1.1% (May +0.3%), keep inflation high.
There will be no FOMC Meeting in August, encouraging JCI to form its own movement pattern. The Fed also canceled the FOMC Meeting for the October 2022 period, except in urgent circumstances such as rising inflation. By assuming the FFR target at the end of 2022 is 3.25%-3.50%; with the projected increase in FFR by 50 bps in September, and 25 bps in November and December, respectively. NHKSI Research sees that the current pressure on the JCI is dominated by negative external sentiment. The domestic sentiment that influenced the JCI movement during August was Core Inflation Jul. YoY (Surv. 2.86%; Jun. 2.63%) which remains low, while GDP growth in 2Q22 is maintained at 5% YoY, and the Rupiah was stronger at IDR14,800/USD at the end of July 2022.
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