The Dow Jones and S&P500 ended slightly lower, while the Nasdaq struggled to stay on the border of positive territory on Tuesday trading (22/08/23) triggered by investors’ concerns that the Federal Reserve will keep interest rates higher for longer; plus the fall in banking stocks as a result of the credit rating downgrade by S&P on several US banks, causing the S&P 500 bank index to fall 2.4%. Investors hope for clarity on the US interest rate trend when Fed Chair Jerome Powell speaks at a meeting of central bankers on Friday in Jackson Hole, Wyoming symposium. The benchmark 10-year US Treasury yield has reacted early by touching a 16-year high amid predictions that the Fed will still maintain the upward trend of the Fed Fund Rate. Meanwhile, the 2-year US Treasury, which is more sensitive to interest rate movements, is currently at 5% yield which is the highest point since early July. Higher borrowing costs will suppress business and consumer spending, and ultimately lead to an economic slowdown. This seems to be evident as the US economic data just reported lower-than-expected Existing Home Sales (July) of 4.07 million units (vs. previous month’s 4.16 million units). From the other side of the world, Japan released BOJ Core CPI at 3.3% yoy, heating up above estimates & previous period at 3%. The Eurozone announced the Current Account (June) which managed to record a massive surplus of EUR 35.8 billion, a sharp contrast to the estimated deficit and the previous month’s result of EUR 7.9 billion. As for today, the market will be presented with PMI data from several countries, before having more focus on economic data from the US in the evening, such as: Building Permits, S&P Global Composite PMI, New Home Sales, and also Crude Oil Inventories which are predicted to drop again by 2.299 million barrels, adding to the thin US oil reserves after minus 5.96 million barrels in the previous period. Speaking of commodities, Crude Oil prices weakened on Tuesday as markets waited to see if Iraqi exports via the Ceyhan oil terminal would resume, which could ease the supply tightening caused by OPEC+ production cuts; while China’s faltering economy did little to help the demand outlook. Gold prices rose slightly on the back of Dollar weakness as the greenback retreated from a two-month high, although fears of rising US interest rates still keep the outlook for the noble metal market bleak.
Indonesia’s current account balance in Q2/2023 recorded a deficit of USD 7.4 billion and the position of Foreign Exchange Reserves at the end of June was still high at USD 137.5 billion. Bank Indonesia explained that the current account deficit is still manageable as the impact of high uncertainty in global financial markets, amidst the
conditions of falling commodity prices and global economic slowdown and rising domestic demand. On the other hand, JCI gave a sweet surprise by rising steadily through MA10 & MA20 resistance and is currently face to face with bullish Flag resistance. Amidst the optimism that this bullish sentiment can still continue, NHKSI RESEARCH advises investors/traders to AVERAGE UP after a solid break of 6930 resistance area (near Closing time).
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