Saved by the Fed
The Fed came to the rescue to boost ailing sentiment which had put the global stock market under pressure recently. Result of the FOMC meeting was that the Fed has removed its “considerable time” and replaced it to “can be patient”, referring to the timing of normalization of monetary policy.
Sharp drop in oil prices have left the FOMC with hardly any justified reason to raise rates sometime in 2015. About 45% drop in oil has also put Russia into a crisis, an eerie reminder of 1998 crisis also originating from Russia. Russia had its ruble declined by about 47% this year, tracking the retreat of oil prices. The rout subsided on Wednesday however, as WTI inched higher to $56.27/bbl while Brent rose to $60.79/bbl.
Latest measure taken by Russia is to ease accounting rules to curb the needs for dollars for banks. The move has boosted ruble and Russian stocks but need more time to assess whether the measure can put an end to the current crisis.
IDR, AHAP, AGRIS
IDR: fell to 12,720 on Wednesday, from 12,900 seen on Tuesday. BI has intervened in order to cap on IDR’s weakness.
AHAP: 11M14 net profit reached Rp14.09bn, up 5% from the same period last year.
AGRIS: Bank Agris has set its offering price at 110 per share, bringing the IPO proceeds to about Rp99bn. About 70% of the funds will be used for credit expansion while the remainder will be used to expand the business network.
Technically Speaking...
JCI managed to hold its ground above 5,000 support, but despite downside risks remain at the moment the upside potential for a rebound is also present.
Should the index fails to follow through the recent gains, it will risk returning to the bottom end of the recent consolidation range around 4,900.
We have seen a test of 5,200 resistance, but successful breakout remains elusive.
Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262.
MACD has re-entered the sub-zero line while the RSI sunk towards the oversold area. This suggests that the index remains vulnerable to further drop but a potential rebound is likely in the near-term.
The week will offer similar trading range for the JCI, between 5,000 and 5,250.
Day Ahead
Fed’s patience and a halt (for now) in oil prices should be positive catalysts for the JCI on Thursday. Rupiah however, remains vulnerable and this will be put under the spotlight along with developments in oil prices. Deeper drop in oil will mean more risk to bear for Russia but the same thing will hold the Fed’s hand from pushing the US interest rates up. For now, JCI is seen between 5k and 5,150.
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