The US stock market was solidly in the red, around 0.5% on Tuesday (04/04/23), after the release of job openings data dropped to 9.931 million, below the forecast of 10.4 million; indicating a cooling labor market, while Factory Orders (Feb.) also fell 0.7%, lower than the -0.5% forecast. These two data follow the weak US manufacturing activity report released on Monday. This implies that economic growth has slowed, and fears of a recession are looming. On the other hand, the market now bets the US central bank is now titled toward a pause to raise the interest rates at the upcoming FOMC Meeting in May, with the probability of a 25 bps rate hike falling to only 42% (from 60% previously), as reported by CME Group Fedwatch. From Europe, the same economic contraction was also reflected in Germany’s Trade Balance figures (Feb.) which could not meet expectations of a surplus of EUR 17 billion but was only able to book EUR 16 billion (the same as the previous month). This afternoon (Western Indonesian Time), German Factory Orders (Feb.) and composite PMI (Mar.) for the Eurozone & UK will be monitored. Later in the evening, market participants will watch US data for the S&P Global Composite PMI, which will shed light on how manufacturing & services business activity fared in March; while private sector job creation (ADP Nonfarm Employment Change) for March is also expected to fall from the previous month to 200k. Both readings will say more about the consequences of the upward trend in US interest rates which tends to depress economic growth, as well as how the Federal Reserve will set its monetary policy going forward.
JCI finally closed 6 points in the green to 6833.18 after going through almost all trading hours in negative territory on Tuesday 04/04/23, as investors re-evaluated the global economic situation and central bank monetary policy. Meanwhile, optimism over domestic fundamentals seems to be more evident than the outlook for Western countries, especially after the Asian Development Bank predicted that the Indonesian economy could grow 4.8% this year and increase to 5% in 2024 (although this figure is weaker than last year’s 5.3%). The relatively quiet trading rhythm yesterday will likely continue today, especially when JCI is at the critical Resistance area of 6860-6870; which, if broken, will break the medium-term downtrend. NHKSI RESEARCH suggests to Hold all positions while waiting for a solid break out before averaging up. The Rupiah exchange rate has been in the spotlight lately, reaching a 2-month strongest level at IDR 14898.5/USD. Considering the soft landing traits of the US economy are starting to emerge, it is likely that the Federal Reserve could begin to be somewhat dovish, thereby potentially weakening the USD’s position over other world currencies.
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