U.S. stocks closed in positive territory on Monday (17/07/23) on expectations corporate earnings will exceed forecasts, but global shares and the dollar traded little changed after data showed the Chinese economy grew slower than anticipated. China overnight reported growth of 0.8% in the second quarter, above the 0.5% forecast, but the annual pace was 6.3%, well below expectations for a reading of 7.3%. From the beginning of the year, China’s GDP has grown by 5.5% yoy in these two running quarters. Apart from Industrial Production (June), none of China’s other macroeconomic data managed to surpass the previous period’s performance. Analysts think the post-COVID economic boom is over and China’s economic situation has lost its momentum. However, fears earlier in the year of a US hard landing have lessened as slower consumer inflation has brightened the outlook on Wall Street as companies begin to report second-quarter results, which is expected to fall 8.1% (according to Refinitiv data), down further from the 5.7% decline expected at the beginning of the month. On the other hand, Inflation is still above the Federal Reserve’s target of 2%. Most market participants expect a 25bps rate hike by the Federal Reserve at next week’s meeting, with a 97.3% probability, according to the CME Group FedWatch Tool. Futures are pricing in an additional 32 basis points of tightening this year, with the benchmark rate expected to peak at 5.40% in November. That implies the market sees a low chance of further rate hikes after the Fed concludes a two-day meeting on July 25-26. Analysts expect only limited upside potential for US stocks which are already highly valued; in fact the S&P500 is now trading at a forward P/E of 19.7x. Speaking of other economic data, the announcement of Retail Sales (June), Industrial Production (June), and Business Inventories (May) on Tuesday evening WIB will be in the spotlight for market participants today, although the data may have little bearing on monetary policy or market direction.

JCI finally closed slightly lower by -2.43points at 6867.14 after touching the High of the day at 6931.27 accompanied by significant foreign net purchases of IDR1.2 trillion (all markets) where they added to the coffers of Indonesian bluechip bank stocks such as BBRI, BBCA, and BMRI. Indonesia reported a Trade Balance surplus (June) that surged unexpectedly to USD3.46 billion, more than double the estimate, and much higher than May’s USD440mn; at a time when Export & Import growth actually plummeted compared to June 2022, at -21.18% yoy and -18.35% yoy respectively. But fortunately, compared to May 2023, Imports fell more by 19.4% than Exports which only fell by 5.08%; so that Indonesia’s Trade Balance in June 2023 was able to book 38 consecutive months of surplus mainly from the non-oil & gas sector of USD4.41 billion, but was reduced by a deficit in the oil & gas sector worth USD0.96 billion. Technically, NHKSI RESEARCH sees that the candle shape on the JCI chart is similar to a Shooting Star, indicating high selling pressure near the critical Resistance of 6945-6965 which if this mid-term Resistance is broken, it will free the JCI’s way to the psychological level of 7000.

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