Global stock indexes fell and the U.S. dollar rose on Friday (23/06/23) as investors digested comments from Federal Reserve officials that signaled further interest rate hikes ahead. The S&P500 and Nasdaq even closed last week by ending their weekly gains which had bagged 5- week and 8-week straight gains, respectively. San Francisco Fed Bank President Mary Daly said that two more rate hikes this year is a “very reasonable” projection. The statement follows comments by Fed Chairman Jerome Powell who had mentioned earlier that the US central bank will not end its tight monetary policy yet, while he provided reassurance that the Fed would proceed with caution. Financial markets have baked in a 74.4% likelihood that the Fed will resume hiking the Fed funds target rate by another 25 basis points at the July meeting, according to CME’s FedWatch tool. The economic data released last Friday explained that US business activity in June fell to a 3-month low as the service sector slowed for the first time this year, and the contraction in the manufacturing sector deepened. Similarly, business activity in continental Europe, at least reflected in June PMI data from Germany, the Euro Zone, and the UK which all moved towards contraction. US Dollar Index rose 0.469%; oil prices closed lower and posted a weekly decline as traders worried about weak demand.

Given the rolling market sentiment, plus this week will be a short trading week for JCI due to the Eid al-Adha 28-30 June holiday (and collective leave), investors/traders will usually choose to be cautious and refrain from positioning too much, given the unpredictability of the market during the holiday. This thinking will further support the dry liquidity in the market and the slow pace of trading in the last two days at the end of semester 1. NHKSI RESEARCH expects JCI to have more chances to continue consolidation and test support in the range of 6620- 6600 or even towards 6560-6550; with ADVISE: HOLD; Wait & See.

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