Asian markets will have their first chance this Monday to react to the speeches of the world’s most influential global policymakers at the Jackson Hole symposium last Friday; where Jerome Powell (Fed Chairman), Christine Lagarde (ECB President), and Kazuo Ueda (Governor of Japan’s central bank) laid out their respective monetary policies. Powell signaled that the upward trend in US interest rates will continue to curb Inflation to their Target level of 2%. As a result, there is a reasonable slowdown in the economy as well as weakening labor market conditions. Treasury yields immediately spiked in anticipation of a higher interest rate for a longer period of time, with 2-year US Treasury yields briefly rising to near cycle highs at 5.12%. Technology stocks briefly came under pressure from rising Treasury yields, which makes growth sectors like tech with higher valuations less attractive. However, the Nasdaq managed to lead the gains on Friday by climbing 0.9%; while the DJI and S&P500 gained 0.7% each. In overall, the Dow recorded its 2nd consecutive week of decline. World crude oil prices rose for the second time on Friday trading (25/08/23) but did not manage to close last week in positive territory; resulting in Crude Oil prices still in negative territory for the second consecutive week amid signals the Federal Reserve is not finished with the trend of rising interest rates to control US Inflation. WTI closed at USD 80.05/barrel last week, down 1.7% on a weekly basis following a 2.3% decline in the previous week. However, prior to that, Crude Oil rose 7 weeks in a row which boosted WTI prices by almost 20%. This week, global crude oil prices will face challenges & potentially move more volatile as macroeconomic data related to US employment figures are released, while markets also face uncertainty from a weak economy in China plus bullish sentiment that has faded from OPEC+ production cuts plan. The prospect of the Fed’s interest rate hike has also made global Gold prices more sluggish, although currently still quite stable around USD 1943.3 / ounce.
Considering JCI’s closing position last week, which technically is still relatively safe above MA10 & MA20 Support, NHKSI RESEARCH expects this SIDEWAYS consolidation will soon get its answer on where JCI decides to break out. Investors/traders are advised to Average UP above Resistance 6925, and buy more if the JCI is able to break the critical Resistance level of 6950-6970.
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