Stepped Back
JCI stepped back after its attempt to break through the all-time record high at 5,251 got repelled and only managed to reach an intraday high of 5,232. The index settled lower at 5,205, still hanging on above the 5,200 mark for now. From a technical standpoint however, the fumble signaled a bearish implication which could spell trouble for the index in the short-term.
Lack of catalysts on the domestic macro shifted the focus on the corporate level where Pefindo reiterated MAPI’s rating at idAA- for both the company and its two bonds. The outlook stayed Stable for MAPI, reflecting MAPI’s strong position in the modern retail industry. The rating was capped by the size of company’s capex as well as more intense competition amidst limited commercial space in major big cities.
Another rating agency, Fitch Ratings said that local coal miners in Indonesia are expected to get an extra time to repay royalties imposed by the government. Currently, the Ministry of Energy and Mineral Resources set the deadline for repayment at the end of October 2014.
USDIDR slipped to 11,760 on Thursday compared to Wednesday’s closing price of 11,781.
US Data
Initial jobless claims were up in the week ending Aug 30. Claims were 4k higher than prior week’s 298k, just 2k higher than the consensus take which is at 300k. US ADP employment change showed 204k of private sector hiring.
ISM for non-manufacturing sector was up in August at 59.6 from 58.7 a month earlier to 59.6. The Markit version also saw the index up at 59.5 vs. 58.5 (consensus and prior).
Nonfarm payrolls figure is seen up to 230k from 209k. The data will be due this Friday.
Technically Speaking...
JCI’s advance stalled at 5,232.66, just below the index’s all-time record high at 5,251. The fall formed a bearish engulfing candlestick pattern which could trigger another bout of decline or two.
As for now, JCI is aiming to secure its ground above 5,200 and subsequently the focus will turn to the next resistance at 5,251, the all-time record high while near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the former lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support.
MACD has edged closer to positive area on Thursday whilst RSI has fluctuated just below the 70% mark. Volume was lower on Thursday, suggesting that the setback could be shallow and temporary.
Day Ahead
Lack of domestic data and catalysts, investors may look elsewhere for the next catalyst to watch. US nonfarm payrolls is set for release on Friday and so far the consensus is okay. From Europe, the recent ECB rate cut is to be seen as confined within the Euro-area and no significant impact on the JCI. On Thursday, the European rates were reduced by 10 basis points with deposit rate now at negative.
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