Major US stock index fell above 1%; as the USD hit a 6-week high, and Treasury yields rallied after US economic data showed producer-level inflation (Jan.) came in higher than expected, while jobless claims were lower; further pressuring the Federal Reserve to continue maintaining a tight monetary policy to combat the inflation. According to the US Department of Labor, Initial Jobless Claims were recorded at 194K, lower than economists’ forecast of 200K. January’s Producer Price Index (PPI) rose 0.7% MoM vs. the forecast of 0.4%. On an annual basis, PPI advanced to 6% YoY, vs. a survey of 5.4%. The Fed official responded by stating that the next FOMX Meeting (March) may need to implement a higher rate hike, such as 50bps. Treasury yields jumped on the remarks, lowering growth sectors of the market, including consumer discretionary and tech. This discourse might follow the ECB’s decision on a 50 bps rate hike next month, as ECB President Christine Lagarde stated in a speech to EU lawmakers in Strasbourg last Wednesday.
JCI ended in negative territory for the second day, a minus of 18.8 point/-0.43%, bringing JCI to 6895.7; along with Foreign Net Sell of IDR 573.4 billion, in which BBCA & GOTO had the biggest fall. The market reaction came after BI’s RDG decided to keep BI7DRR at 5.75%, putting the brakes on the hike after 6 consecutive months of lifting rates to the current level, which they believe is enough to bring core inflation back to the 3% target level this year. Technical-wise, a fall below 6900 might implies an injury to the first Support, which is MA10 at 6910, and bring JCI further from the Neckline of the bullish reversal Inverted Head & Shoulders pattern at 6955-6965 range, let alone the psychological level of 7000. NHKSI RESEARCH advises investors/traders to focus more on the second Support, MA20, in the 6885 6875 area today to prevent the possibility of reducing positions even more in case of further consolidation.
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