The US tech Nasdaq became the only index to close positively by 0.47% due to its 1Q23 results exceeding expectations, while the Dow Jones and S&P500 fell into negative territory triggered by a potential new banking crisis surrounding First Republic Bank, where investors feared that the US government would not continue its efforts, after the bank reported that its deposit position had fallen sharply earlier this week. This negative sentiment dragged the S&P500 banking index down 1.4%, also US bank regulators were weighing the prospect of downgrading their private assessments of First Republic, which could curb its borrowing from the Fed. Another important index, the Dow Jones Transportation, sank 3.6%, leading to its biggest two-day decline since May 2022. The index was hurt by economy jitters after Capital Goods (Mar.) data, which explained that new demand for US manufactured capital goods fell below expectations; as did shipments; thus indicating that corporate spending on raw materials is unlikely to bounce back during the first quarter of this year. These above issues are dark clouds that overshadow the positive sentiment of issuers’ performance reports that turned out to be quite bullish, where analysts can now reduce the contraction in average profit of S&P500 companies for 1Q23 to 3.2% only, from the initial estimate of 3.9% (163 out of 500 companies that have reported 1Q23 financial statements, 79.8% of them managed to post performance above expectations, as reported by Refinitiv). Important macroeconomic data from Europe released yesterday: GfK German Consumer Climate (May) was still predicted to be more bearish than expected; although Labour Productivity from the UK was detected to have started increasing since 4Q22. On the other hand, US Durable Goods Orders (Mar.) data in fact experienced a significant increase above forecast & previous period, indicating that new demand for durable manufactured goods is actually quite high. This became a contribution that brought the US Trade Balance (Mar.) to reduce the deficit to USD84.6 billion.
The US energy sector dropped by 1% as global oil prices continued to slip as ongoing fears about a potential global recession; amidst the fact that weekly US oil inventories came in at minus 5 million barrels, significantly below estimates of minus 1.486 million barrels. Considering the current market sentiment, JCI is expected to remain quite focused on its bullish break out yesterday (supported by Foreign Net Buy of IDR 1.81trillion), which is expected to pullback for a moment to test Support in the 6870-6840 region; if this level can be maintained, it will pave the way for the nearest upward TARGET to around 6950-6960 = crucial level before picking up 7000. NHKSI RESEARCH advises investors/traders to add gradual long positions especially on stocks that have broken Resistance yesterday; while still remaining vigilant in addressing important data that market participants are waiting for this week, namely US GDP 1Q23 and similar Inflation data such as PCE Price Index (which measures the average.
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