All three major US stock indexes had to close in negative territory after market participants priced in the possibility of the US Federal Reserve pausing the pace of interest rate hikes at the upcoming FOMC Meeting on 13-14 June. Supporting that thinking, the US Services PMI (May) unexpectedly came in lower at 54.9, lower than the forecast of 55.1 but still relatively expansionary from the previous period; thus putting the S&P Global Composite PMI (May) in a slightly contracted position from the estimate although still safely above the 50 cut-off level. Factory Orders (Apr.) and ISM NonManufacturing PMI (May) were also both released below estimates, thus these signs of economic slowdown raised 80% of market participants’ hopes that the Fed has enough reasons to put the brakes on the FFR upward trend, as reported by the CME Group Fedwatch Tool. On the other side, the Chinese Composite PMI managed to expand to 55.6, higher than the previous period’s 52.9, supported by their services sector. Germany also managed to increase their Trade Balance (Apr.) surplus to EUR 18.4 billion, EUR 3.5 billion higher than the previous period. In terms of PMI (May), Germany, the UK and the Eurozone are all still struggling to stay on the path of expansion. In terms of commodities, the nine OPEC+ countries have agreed to extend the production cut period until December 2024, from December 2023 previously; considering the weak global demand outlook.

Domestically, Indonesia released a number of interesting economic data related to economic turnover & Inflation figures. Starting from foreign tourists arriving in Indonesia increased by 276.31% yoy in April 2023, supported by recovery in the tourism sector as the pandemic ban was lifted. Meanwhile, Indonesia reported its Inflation Rate (May) fell to a 12-month low of 4%, from 4.33% in April and was a success lower than consensus of 4.22%. Core Inflation also moved further away from BI’s safe limit of 3%, landing at an 11-month low of 2.66%, sloping from forecast & previous at around 2.8%. NHKSI RESEARCH sees the JCI is looking for more solid motivation to break the first Resistance at 6660 to end this short term downtrend. The market is likely to move sideways like this until at least the Fed’s interest rate decision on June 14, although there are still many trading opportunities in the Indonesian capital market.

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