US stocks ended mixed on Wednesday (14/06/23) after the Federal Reserve kept the Fed Fund Rate unchanged at 5%- 5.25% but gave a hawkish signals that the benchmark rate will likely rise by another 50 bps (or two more times) until the end of the year, towards a range of 5.5% – 5.75%. Prior to the FOMC Meeting decision, PPI (May) data was released at 1.1% YoY and -0.3% MoM, which fell below expectations of 1.5% and -0.1%. Traders now see a 63% chance the central bank will raise interest rates in July, up from 60% earlier on Wednesday, according to the CME FedWatch Tool. The energy sector dropped more than 1% after oil prices came under pressure on worries that further rate hike would disrupt economic growth and oil demand. Us stocks have rallied in recent weeks, lifting the benchmark S&P 500 and Nasdaq to 14-month highs following signs of economic resilience, a better-than-expected earnings season and bets that interest rates are near their peak. The S&P is up about 14% so far in 2023, while the Nasdaq has climbed about 30%. From the Europe, the UK reported GDP (Apr.) at 0.5% yoy, falling short of expectations of 0.6% although it actually managed to rise from the previous month at 0.3%. On a monthly basis, UK economic growth managed to beat last month’s -0.3% to 0.2% in April. UK Industrial Production & Manufacturing Production (Apr.) are still stumbling in negative territory, resulting in a Trade Balance deficit of GBP 15bn (lower than forecast & previous period). Today will see Industrial Production (May) figures from China, which plays a significant role in the global economic recovery. Indonesia and Eurozone will also release Trade Balance data where Indonesia is expected to come out at USD 3.5 billion for May (lower than previous month’s USD 3.94 billion); and Eurozone at EUR 21.5 billion (also lower than previous month’s EUR 25.6 billion). Later in the evening market participants will monitor the ECB’s decision to raise interest rates to 4% (from the current 3.75%); while the US will report a myriad of economic data namely: Core Retail Sales (May), weekly Initial Jobless Claims, Philadelphia Fed Manufacturing Index (June), Retail Sales (May); and Industrial & Manufacturing Production (May).

The recent actions of JCI investors ahead of the FOMC Meeting announcement seems reasonable as it was done around the crucial Resistance area of 6735-6765, thus triggering profit taking or securing profits while waiting for further regional market developments. NHKSI RESEARCH expects JCI to test the strength of Support 6685-6665 in response to sentiment related to the FOMC Meeting decision but still has a chance to break Resistance 6765 in the near future. Gradual Average Up advice is still recommended as the best investment strategy at this time.

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