The Wall Street indices got a jolt from the 4Q22 GDP data, which emerged at 2.9%, beating the expectations of 2.6% but indeed lower than 3Q22, which reported at 3.2%. This sign of economic slowdown started to emerge due to the Federal Reserve’s aggressive pace of interest rate hikes, as well as the weakening demand in the housing market as reflected in Building Permits, which contracted to 1.337 million, lower than the previous 1.351 million. The weakening demand was also seen from the New Home Sales (Dec.), which fell to 616K, lower than the forecast of 617K, although more robust than the previous month at 602 K. As for the labor market remains tight despite the massive wave of layoffs at several technology giants, with Initial Jobless Claims still at 186K, coming in lower than the 205K expected for last week and below the previous period of 192K. Those several results have made investors expect increasingly dovish future rate hikes, though The Fed has emphasized that the 5% FFR is non-negotiable to suppress US inflation further.

JCI received a boost of 34.8 points to 6864, with a focus on FY22 earnings and macroeconomic data. Foreign fund flows have been eagerly entering the equity market with net purchases amounting to IDR 978.15 billion (all market) over the past week, with focusing on the blue-chip stocks in basic materials, technology, banks, and industrial sectors. Moreover, Rupiah is still hanging below the 15000 level, adding a positive catalyst to the 4Q22 banking stocks performance, such as BBNI & BBCA, which have been released with profits above expectation. Updates on the constituents of the LQ45 and other similar indices will change the battle map, especially the Fund Managers’ portfolio concentration. NHKSI RESEARCH is optimistic that this dynamic, positive momentum can be maintained at the end of this week, with expecting JCI to close above 6900, thus could end the current medium-term downward.

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