All three major US indexes ended in positive territory, after the recent release of lackluster employment data signaled a cooling US economy, reinforcing expectations the Federal Reserve will pause rate hikes in September. Meanwhile, Nasdaq logged its highest close that surpassed its previous high on August 1, the S&P 500 also closed at a three week high after an ADP National Employment report showed private payrolls increased by 177k jobs in August, which beat the 195k forecast, and clearly lower than July’s 371k. The workers enjoyed a rise in wages of 5.9% yoy, the slowest growth since October 2021, which was felt by all 50 states and Washington DC. US 2Q12 GDPdata was also revised to 2.1% yoy, slower than a preliminary estimate of a 2.4% growth.The prospect of a soft landing in the US economy supported the rise of growth stocks such as the Technology sector which led the gains up 0.83%, followed by the Energy sector gaining 0.51%. On the other hand, the US Treasury yield had to slip to a 3-week low, with the 10-year Treasury yielding 4.12%. Investors are now shifting focus to the Personal Consumption Expenditures (PCE) Price Index (scheduled for Thursday), which is the Fed’s favorite benchmark for Inflation; as well as Nonfarm Payrolls due on Friday to provide further insight into interest rate trends. According to Investing.com’s Fed Rate Monitor Tool survey, there is a 90% bets on the Fed’s next move in September continue to lean heavily toward a pause. Meanwhile from continental Europe, German CPI for August was revised up to 6.1% yoy from an initial estimate of 6.0%; although slightly weaker than the previous month at 6.2%. The Eurozone recorded Consumer Confidence (Aug.) at -16.0, exactly in line with economists’ predictions and suggesting German consumers view the business world more pessimistically than July’s reading of – 15.1. European economic observers will also be occupied with a series of data from the continent, such as: German Retail Sales (July), French Consumer Spending (July), French CPI preliminary number (Aug.) French GDP 2Q23, German Unemployment Change & Rate (Aug.); and not forgetting the Euro Zone preliminary CPI estimate for August plus the region’s Unemployment Rate (July). South Korea and Japan have released a number of economic data this morning; where notable data such as KRW Industrial Production contracted further at minus 8% yoy in July (vs -5.9% previous); as did KRW Retail Sales (July) which weakened by -3.2% mom (vs 0.9% growth in the previous month). At least the Services sector still released positive numbers as reported in Service Sector Output (July) which beat expectations of stagnating at 0% by actually growing by 0.4%. Meanwhile, Japan announced Industrial Production (July) also grew negatively by minus 2.0% mom; clearly plummeting compared to the previous month which still recorded positive growth of 2.4%. Japan’s Retail Sales for July looked more vibrant as it rose to 6.8% (above forecast & previous month). More important economic data is awaited from China, as they will publish the Chinese Composite PMI (Aug.), Manufacturing & Non-Manufacturing PMI (Aug.).
The rally in JCI was again beaten back when there was an attempt to break the 7000 level (yesterday’s high 7008), leaving JCI closed at 6966.65 (+8.8pts / +0.13%) with a Shooting Star shaped candle (indication of bearish reversal after failing resistance test). The foreign investors still seem hesitant to enter the Indonesian stock market as yesterday they recorded a net sell of IDR 247.8 billion (RG market); bringing the total net sell position for August (which is almost over) to a Net Sell position of IDR 1.14 trillion (RG market). Although slightly disappointing, it must be recognized that the closing position of the JCI on Thursday trading (30/08/23) was the highest since the beginning of the year. Therefore, NHKSI RESEARCH still maintains its bullish note but advises investors/traders to wait for a solid break of 6970 level, preferably 7000 (Closing position) before expanding the portfolio.
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