Dow Jones and others finally closed in negative territory as Nasdaq led the weakness with minus 0.9%, after the market had greened quite significantly on Wednesday trading (12/04/23) as a market reaction to the release of Inflation data (Mar.), which was able to cool down to 5% YoY, lower than the forecast of 5.2%. Core CPI is still somewhat tough to come out at 5.6% YoY, slightly higher than the previous period of 5.5%, although on a monthly basis it had sloped to 0.4% MoM (from 0.5% previous). The Fed Meeting Minutes, which released a few hours later, showed that the central bank officials were now forecasting a “mild recession” later this year with the emergence of the banking crisis and also showed that although the regulators had the opportunity to hold off on the rate hike at the March meeting, they still agreed that a 25 bps rate hike was still necessary. While the inflation level is still far from the Federal Reserve’s 2% target, market participants are pricing in an above 70% probability that the central bank will still maintain its hawkish stance by hiking rates 25bps at the upcoming FOMC Meeting in May; and slowly drop to 4.336% by the end of the year. Another important data from the US today is PPI (Mar.) which is expected to slope to 3% YoY from 4.6% previously; on the other hand PPI on a monthly basis is predicted to strengthen to 0.1% from -0.1% previously. In addition, the reading of Initial Jobless Claims will also be closely watched where market expectations expect jobless claims to increase to 232k, from 228k previously, considering the symptoms of an economic slowdown that began to appear. The European central bank’s view was similar in the sense that they think there should still be a few more rate hikes although no clear statement on the amount to be imposed has been made. US Treasury yields fell, with the most rate-sensitive 2 -year tenor dropping 8.8bps to 3.97% and the benchmark 10-year tenor weakening 3bps to 3.404%. The US Dollar index was also seen subdued over the world’s 6 major currencies by shedding 0.558%. On the other hand, global Gold prices crawled up 0.3%, comfortable at USD 2024.9/ounce. US WTI oil prices rose USD 1.73 to USD 83.26/barrel, while Brent gained USD 1.72 to USD 87.33.
Today’s trading sentiment will be colored by a series of economic data, from the Asian continent: China Trade Balance (Mar.) which is expected to erode quite deeply from the previous month; while from the European continent, GDP & Trade Balance (Feb.), Manufacturing Production (Feb.), and Industrial Production (Feb.) from the UK are awaited; followed by German CPI (Mar.), and Euro Zone Industrial Production (Feb.). NHKSI RESEARCH estimates that the bullish air from regional markets still cannot be expected to bring JCI to break through the critical Resistance of 6850-6870, especially after yesterday closed with a Dark Cloud-like candle and put JCI below MA10 & MA50 again, making the range of 6810-6815 as the closest Resistance that must be overcome today. Therefore, Wait & See advice while waiting for global developments is still considered the wisest before adding more aggressive portfolio positions. Trading opportunities are still available if investors / traders are observant of sector rotation. Foreign buying interest is still consistent with net purchases of IDR 1.82trillion yesterday, further adding to the solid coffers of their Indonesian equity portfolio at IDR 11.58trillion YTD. Rupiah exchange rate is still comfortably below IDR 15k, although yesterday’s closing position at IDR 14880/USD with a long-leg Hammer-like candle indicates a potential trend reversal.
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