Timid Inflation
JCI ended slightly up amidst lack of fresh catalysts. Weak sentiment has weighed on the index recently due to political tempest on the domestic front. In addition, expectation of higher Fed rates has also hurt rupiah, adding more bad sentiment for the index.
USDIDR slipped a bit, but stayed strong on Wednesday, ending at 12,188 after finishing at 12,212 on Tuesday.
Inflation was modest in September at 0.27% (m/m), but showed acceleration to 4.54% on year-on-year basis. Higher electricity price is cited as the trigger along with higher prices of processed food and beverage. Core inflation slowed to 4.04% (y/y). BI kept its target range for this year between 3.5 and 5.5%.
Ebola scare hammered US stocks as the Dow plunged more than 200 points overnight.
Back to Deficit
Trade balance returned to deficit of US$318.1 million in August after a US$50 million surplus in prior month. Oil and gas imports rose and took the sector to a US$800 million deficit, in contrast with the US$490 million surplus in the non-oil & gas sector.
Total exports in August was US$14.48b, imports at US$14.79b. The eight-month balance of trade was at a deficit of US$1.4b.
Another data due on Wednesday was the HSBC Markit PMI for the manufacturing sector. In September the index bounced to 50.7 from 49.5 seen in August.
Technically Speaking...
JCI continued its consolidation within the recent range of 5,100-5,262. Despite the small gains on Wednesday, the outlook remains murky right now.
As we mentioned earlier, the JCI is at risk of heading towards the next supports at 5,039 and 5,000 as the 50-day EMA has been recently punctured.
On the upside, near-term resistance lies at 5,150, followed by prior resistance at 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. Subsequently, the next psychological hurdle for the index at 5,300.
Taking guidance from the indicators, the MACD continues to move away from the zero line; the RSI has stopped sinking for now, while volume is slipping a bit. For now, we can expect the index to maintain its position within 5,100-5,262 consolidation range, but this time with short-term downside bias.
BRNA added, with WSKT stays as an open reco pending entry. BRNA is recommended at 735-755, with risk below 675 and target set at 950, about 25% upside potential.
Day Ahead
JCI is still seen struggling within a wide consolidation range of 5,100-5,262. Equities in the U.S. has been severely hit with the Dow fell more than 200 points due to Ebola scare, hurting sentiment even more. Lack of positive yet fresh catalysts, 200+ dive abroad, as well as domestic political factor will put a cap on JCI. The bias is down for Thursday.
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