All three major US indexes recorded a surge above 1% at their highest in 14 months, as investors cheered economic data that fueled bets that the US Federal Reserve is nearing the end of its aggressive interest-rate hike trend. Treasury bond yields slid after a slew of economic data pointed to easing inflation, helping offset worries about future rate hikes and boosting tech giants like Apple and Microsoft to record highs. As an information, so far in 2023, the S&P 500 is up about 15% and the Nasdaq has climbed about 32%, fueled by signs of economic resilience, a better-than-expected earnings reports, and bets that interest rates are near their peak. Data showed US Retail Sales unexpectedly rose in May as consumers spent on a range of goods including vehicles. Initial Jobless Claims came in at 262k, higher than economists’ forecast of 249k. Imported goods prices fell in May and the annual decline was the deepest for 3 years. Currently, traders see a 67% chance of a 25 bps rate hike in July, followed by a potential rate cut by December, according to the CME FedWatch tool. From Europe, the European Central Bank raised interest rates for the eighth consecutive time, as expected by 25 bps to bring the deposit rate at 3.5% and borrowing cost at 4%. The ECB also signaled that there is still potential for further increases to combat Eurozone inflation which is still perched at 7%, to drop to the ECB’s target level of 2%. The Eurozone Inflation (May) report will be the market’s concern this afternoon at 4:00 PM GMT with consensus sloping to 6.1%.

The Central Statistics Agency (BPS) noted that Indonesia’s trade balance returned to a surplus in May 2023 amounting to USD 440 million. It was the 37th consecutive month of surplus, but the lowest amount since May 2020. The surplus fell from USD 2.90 billion in the same month of 2022, far below the market consensus of USD 3.02 billion. Nevertheless, Export & Import made a positive report card by rising significantly above expectation, by 1% and 14.35% yoy respectively. The increase in exports mostly came from non-oil & gas exports by +1.9% yoy (vs -30% yoy in Apr23), while the increase in imports came from all types of goods especially capital goods and consumer goods imports by +60% and +36.5% yoy (vs -7% and -18% yoy in Apr23). This fact indicates an increase in domestic economic activity and optimism for a higher business climate going forward. Considering the sentiments rolling in the market, NHKSI RESEARCH estimates JCI still has the potential to close the end of this week with a bullish notation (or at least Sideways) testing the decisive Resistance of 6735-6765. The Average Up advice accordingly is still the wisest to apply.

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