China’s economy does not seem strong enough to drive the global economy, as their Composite PMI for April still contracted to 54.4 (from 57 previously) where the economic slowdown was spread evenly across all sectors. While from the US, the ISM Manufacturing PMI (Apr.) looks increasingly expansionary (although it has not yet reached the normal level of 50) and can even exceed the forecast & previous period at 47.1. On the other hand, market participants are also digesting the rescue story of First Republic Bank, which was forced to be auctioned by US regulators & eventually bought by JPMorgan for USD 10.6trillion. Amidst this mixed market sentiment, the market expects the Fed will need to raise interest rates by 25bps at this Wednesday’s FOMC Meeting decision; thereby causing the Dow Jones to move flat at the start of this month.

Similar conditions are likely to prevail in the Indonesian stock market, given that investors are just coming in after the long Idul Fitri holiday plus the long weekend last week (although foreigners posted a significant net buy of IDR 15.26trillion in the short trading month of April). It is expected that there will be some adjustment time as we await the release of Indonesia’s Inflation data (Apr.) which is predicted to ease further to 4.39% YoY (from 4.97% previously), accompanied by Core Inflation which also eased to 2.89% (from 2.94% previously). Considering the market sentiment, NHKSI RESEARCH expects that the bullish trend in the market will continue to break through JCI’s crucial level of 6950-6960 in order to move towards the psychological level of 7000s. A gradual Average Up suggestion is the wisest to do while monitoring market interest.

Download full report HERE.