The Dow Jones Index and others closed in negative territory, of just under 1% in the first trade of the week on Tuesday (06/20/23), pressured by energy stocks as investors paused their bullish bets on stocks ahead of the Federal Reserve chairman Jerome Powell’s testimony before Congress due tonight at 21.00 Western Indonesia Time. Traders will be closely watched for clues on how strongly the head of US Central Bank stresses the need to resume rate hikes following a pause last week. Meanwhile, energy stocks were the biggest drag on the broader market, pressured by a stumble in oil prices as China, the biggest crude importer, resurfaced. CNPC’s Economics and Technology Research Institute forecast China oil demand to grow 3.5% to 740 million tons in 2023, down from a prior forecast of 5.1%. The Financial sectors were also in the red as Goldman Sachs Group Inc slipped 2% after forecasting weaker China economic growth. Talking about China, China’s central bank cut another 10bps benchmark interest rate to 3.55% to further stimulate their economy, but on the one hand it also confirms that China needs more stimulus to boost their slow economic recovery after the Covid pandemic. In terms of economic data, the US Housing Starts (May) report rose 21.7% mom, as well as Building Permits (May) which recorded an increase of 5.2% mom; in contrast to the previous month’s position in negative numbers; signaling the health of the property sector is still quite good. Germany reported Inflation at the producer level or PPI (May) managed to flatten 1%yoy and -1.4% mom; lower growth than expectations and the previous period. As for today, the UK Inflation rate will get the spotlight as the May figure is expected to tame slightly to 8.5% yoy compared to April at 8.7%, although Core CPI may still be a bit tougher to beat. From the Asian continent, South Korea released PPI (May) data which fell to 0.6%yoy, slightly higher than expected but successfully sloping from April at 1.6%).

JCI also slipped back into negative territory on the second day of the trading week; accompanied by foreign net sell of IDR 409.63 billion, bringing the total Foreign Net Sell for the week to IDR 2.25 trillion. Investors’ nervousness on the increasingly gloomy global financial market outlook amidst predictions of a continued upward trend in US benchmark interest rates, sent Rupiah weakening to above IDR15000/USD after almost 3 months comfortably below that psychological level. With JCI currently below MA10 & MA20 Support, NHKSI RESEARCH reminds Indonesian investors/traders to be more vigilant as this opens up the potential for further consolidation, to test Support again at 6610-6600/6560-6550.

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