Wall Street closed flat in early week trade, while US Treasury yields pulled higher with investors braced for this week’s testimony from Federal Reserve Chair Jerome Powell later tonight and the February jobs report on Friday. US Factory Orders (Jan.) fell lower than expected at 1.6% MoM (vs. forecast -1.8%, vs. previous 1.7%), while UKK Construction PMI (Feb.) came in at an expansive 54.6 (higher than forecast 49.1, vs. previous 48.4). From Asia, market participants will also keep an eye on China’s Trade Balance (Feb.) report, which is predicted to increase to USD 81.8 billion from USD 78 billion. The raw commodity materials sector was weak yesterday after China set a lower-than-expected target for economic growth this year at around 5%, which was quite disappointing as it was lower than the market forecast of 5.5%. German Factory Orders (Jan.) will also attract market attention to see if it is as contractionary as the US. New orders for German manufacturing companies are projected to fall to -0.9% from the previous month’s 3.2%.
A slow trading pattern was also seen on JCI, where it closed flat, 6 points downward but still stayed above the 6800 Support level. Bank Indonesia Governor Perry Warjiyo said that Indonesia’s economy could grow 5.1% by 2023 as they try to bring inflation down to below 4% in the 2nd semester. However, the statement could not prevent yesterday’s Foreign Net Sell, which amounted to IDR 250.35 billion, bringing the Rupiah exchange rate to IDR 15322/USD (source: RTI Business). To reduce dependence on the USD, Bank Indonesia and Bank of Korea agreed to extend the bilateral currency swap arrangement (BCSA), which allows the exchange of local currencies of both countries up to KRW 10.7 trillion or equivalent IDR 115 trillion. Considering the JCI position that has not yet managed to crawl above the first Resistance: MA50/6830, NHKSI RESEARCH considers the threat of further consolidation is still present. Therefore, Indonesian capital market investors/traders are advised to Hold all positions but be more vigilant to reduce positions in case Support 6800-6780 is further broken down; as it will further confirm the direction to the following Support at 6719 level (= FR61.8).
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