A strong rebound on financials helped Wall Street’s three indexes to post solid gains of over 1% on Thursday (16/03/23), with the Nasdaq leading the way at 2.48%. Several US financial institutions came together to bail out First Republic Bank by USD 30 billion to save the bank from the downfall that occurred to SVB & Signature Bank. US Treasury Secretary Janet Yellen also tried to calm depositors by stating that the US banking system remains sound and people can feel confident that their deposits will be there when needed. Credit Suisse also experienced the same banking assistance after the Swiss National Bank pledged up to USD 54 billion in credit support to shore up liquidity and investor confidence. Meanwhile, yesterday’s US economic data stated that Initial Jobless Claims came out lower than expected at 192k claims (vs. 205k forecast, vs. 212k previous), signaling that the US labor market is still tight. On the other hand, Building Permits (Feb.) rose higher than expected and the previous month, at 1.524 million. In response to this data, money markets estimate the Federal Reserve will raise interest rates by 25 bps at next week’s FOMC Meeting, rising to 80% from below 50% previously. Meanwhile, as expected, the ECB has preceded by raising their benchmark interest rate by 50 bps at yesterday’s central bank meeting. This afternoon (GMT), the Eurozone CPI figure (Feb.) will be monitored; the figure is expected to remain firm at 8.5%.
On the contrary, due to the turmoil in the global financial sector, JCI has not been able to bounce back from the negative territory throughout Thursday’s trading, closing with a decline of almost 1% to the Support area of 6565.73; triggered by Foreign Net Sell of IDR 732.09 billion. Bank Indonesia has also set BI7DRR to remain at 5.75% (since January) as the previous rate hike is believed to be sufficient to control Indonesia’s Inflation rate to its target this year. Considering the market sentiment, NHKSI RESEARCH sees the possibility of a technical rebound on JCI, which has entered the critical Support area of 6550-6500; considering that RSI is also in Oversold territory. However, Indonesian capital market investors/traders should avoid big purchases at the end of the week to maintain exposure upon the next possible unexpected blow from the global market over the weekend.
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