BUS stock markets closed mixed on Thursday (31/08/23), closing August with a total monthly decline of 1.8% for the S&P500, 2.4% for the Dow, and 2.2% for the Nasdaq. As for yesterday, The Nasdaq reached its highest in over four weeks after a Commerce Department report showed the Personal Consumption Expenditures (PCE) price index, considered the Federal Reserve’s preferred inflation gauge, climbed 3.3% yoy in July, in line with expectations. Meanwhile, the Core PCE price index (which excludes volatile food & energy prices) also rose as expected at 4.2% yoy in the same month. On the other hand, Consumer Spending rose 0.8% mom in July, the fastest pace in more than six months, perpetuating the notion of a resilient consumer spending power. Traders’ expectations for a pause in rate hikes at the Fed’s September policy meet remained at an 88.5% chance, while they also bet a 51% chance on the Fed keeping rates unchanged in November, according to the CME Group’s FedWatch tool. While the data that has been released is quite in line with market expectations, thereby aligning with the purpose of the interest rate hike trend that has been carried out since 2022. Market participants will now focus on the following data that will appear this Friday, namely Nonfarm Payrolls. Please note, weekly jobless claims for the week ending August 26 only came out at 228 thousand, below the estimate of 235 thousand. The data follows slower growth in ADP Nonfarm Payrolls which was released earlier on Wednesday, signaling a softening labor market and a positive catalyst for the market. The 10-year US Treasury yield also reacted by dropping to 4.09%, giving an upward push to large Tech stocks. The UBS is quite confident that the S&P500 will reach the 4700 level by June 2024, compared to the end of 2023 target around the 4500. According to UBS, stock growth could climb a bit higher in 2024 as earnings growth improves and the marketĀ  begins to anticipate eventual Fed rate cuts if inflation continues to move towards the 2% target level desired by the US central bank. UBS also added that there is a possibility for the S&P 500 to hit 5200, if artificial intelligence (AI) really proves to be a game-changer next year. From Asia, China released Manufacturing PMI (Aug.) data which looks increasingly vibrant at 49.7, although not yet crossing into expansionary territory but the reading has exceeded expectations & last month’s position at 49.3. Unfortunately China’s Non-Manufacturing PMI retreated to 51.0 (missing expectations and lower than the previous month); bringing the Chinese Composite PMI up just 0.2 points to 51.3 in August. While from continental Europe, Germany reported Retail Sales in July plunged on a monthly and annual basis, unable to meet expectations and clearly showing a downward trend compared to the previous month. Meanwhile, the unemployment rate of Europe’s largest economy was recorded at 5.7% in August, in line with expectations that the level had increased from the previous month at 5.6%. 18,000 new unemployed people appeared in August, much higher than only 1,000 in the previous month. The Eurozone gave a preliminary estimate of the August Inflation rate at 5.3% yoy, above expectations of 5.1%; they also released the July Unemployment Rate which was unchanged at 6.4%. Here are some important data that investors should be monitoring today: Japan has reported 2Q23 Capital Spending which fell to 4.5%yoy, from 11% in the previous quarter. While South Korea has announced a Trade Balance (Aug.) surplus of KRW 870 million, unfortunately missing expectations at KRW 1.65 billion, triggered by Exports & Imports which are still immersed in negative growth although it has slowed somewhat from the previous month. Both countries mentioned above will soon report their August Manufacturing PMI, almost at the same time as Indonesia and China release the same data. Indonesian investors will also be looking forward to August Inflation data which is estimated to come in at 3.33% yoy, up from July at 3.08%. Later in the evening, the US stock market will react to the release of Average Hourly Earnings (Aug.), Nonfarm Payrolls (Aug.), Unemployment Rate (Aug.), and Manufacturing PMI data for August.

As predicted, JCI seemed to retreat gradually after touching the critical Resistance area of 6970-7000, closing red at 6953.26, after yesterday’s low almost tested the nearest Support area around 6915-6920. The bullish tone is still maintained despite being a little pessimistic that JCI will break through to 7000 by the end of this week, considering that there are quite a lot of market catalysts that need to be digested further. NHKSI RESEARCH advises investors/traders to refrain from buying too much today while watching the market interest.

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