The three major U.S. stock indexes ended down more than 1% each on Thursday (24/08/23), led by a drop in the Nasdaq which posted the biggest decline of 1.87% after this week’s sharp gains and as investors were nervous ahead of Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole – Wyoming annual symposium. Concerns that the US central bank will maintain its hawkish tone on interest rates are justified, especially after referring to the recently released economic data of Core Durable Goods Orders which rose 0.5% mom in July, higher than forecast & previous month’s 0.2%. Similarly, Initial Jobless Claims turned out to be only 230k (3 week lows), below expectations of jobless claims to remain the same at the previous 240k; signaling that the labor market is still strong. US Treasury yields immediately reacted by rising higher. Investors also digested comments from Philadelphia Fed President Patrick Harker, who said the Fed will need to maintain tight monetary policy for a while. Powell’s views will certainly also be factored into the Michigan Consumer Expectation & Sentiment (August) which will be announced almost at the same time as his speech tonight at around 21:00 Western Indonesia Time (WIB), as this index will give an idea of how consumers expect the business climate to be in the next 6 months. Easing inflation in the UK has improved consumer confidence, at least the GfK Consumer Confidence data for August did not fall as deep as expected at -29, but instead managed to be reported at -25 only, a more optimistic move than the previous month at -30. However, there is still plenty of work for the European continent, as the largest economy there, Germany, will be monitoring the development of its second quarter of 2023 GDP which is likely to remain sluggish at -0.2% yoy, similar to the previous quarter. Almost at the same time, the German IFO Business Climate index (August) will explain the business community’s expectations for the next 6 months.

From the Asian continent, Japan just announced Tokyo-area Inflation easing slightly to 2.9% yoy (already on a 4- month downtrend), although nationally their August CPI rate seems to have risen slightly to 2.6% yoy. Bank Indonesia yesterday has set its benchmark interest rate at 5.75%, which has been happening for 7 consecutive months, given that the current BI7DRR position is sufficient to control inflation plus strengthen efforts to stabilize the Rupiah exchange rate. USD/IDR is at IDR 15,247/USD, having slipped from a 5-month high of IDR 15,391/USD a few days ago. Considering the market sentiment and JCI’s closing position yesterday technically, NHKSI RESEARCH reckons that the MA10 & MA20 Support around 6890 will be really tested today. Investors / traders are advised not to add too many positions at the end of this week, and take a Wait & See position as other global market participants are anxiously awaiting Powell’s speech tonight.

Download full report HERE.