March In Review

US Nonfarm Payrolls came in at 175k in February, exceeded the consensus of 149k and higher than January’s payrolls (+129k); unemployment rate ticked up to 6.7%, compared to consensus and January’s rate which were both at 6.6%. The data managed to re-established the upward momentum (March 10) but it was only

when the next big thing came up…

Jokowi for President. The declaration made by PDI-P sent euphoria on March 14, sending the JCI past layers of resistances as it soared 3.2% beyond 4,800 mark. The next day (March 15) the index hit this year’s peak at 4,903.50. Speculations now circulate on who will be appointed as Jokowi’s running mate in this year’s election.

Yellen Laid Out the Blueprint. The Fed did it again. Janet Yellen laid out the groundwork for the coming Fed’s rate rise. The Fed boss said that the central bank has dropped unemployment rate as one of its trigger for rate rise and that this year the FOMC will conclude its tapering campaign. With just $55 billion left in bond purchasing, it will take about six Fed meetings to cut it down to zero if the pace is to be maintained at $10bn each, or even faster if the FOMC chooses to step up the pace. About six months from there, the Fed may start raising rates – according to Yellen. Whether that was a slip-up by the Fed’s number one or not remains to be seen, but surely the statement knocked the JCI off its high…

Red Alert. Russia annexed Crimea after a referendum showed that almost all Crimeans chose to return to Russia after 60 years with Ukraine. The event triggered tensions between the West and Russia, leading to some sanctions imposed on Russia. The situations are still developing, but recently it was said that Putin has no plan to invade Ukraine and may prefer to take the diplomatic approach to settle the tensions. While the issue was initially negative, the impact to JCI is not expected to be prolonged and, as with other geopolitical issues, tend to be short-lived except

it will lead to a global conflict.

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Morning Dew - 28 March 2014

Taking A Pause

Global stocks took a pause as lack of fresh catalysts led to muted trading sessions.

Domestic indexes finished slightly down while European indexes ended mixed with DAX gained but FTSE fell slightly. The Dow ended slightly lower overnight.

Indonesian household consumption is seen growing 5.6% (yoy) in 1H14, according to DBS Bank. Legislative election which is scheduled to be held on April 9th 2014 is cited as the main reason behind the accelerated consumption. On GDP, DBS Bank forecast growth at about six percent this year, higher than BI’s forecast which stands between 5.5% to 5.9%. Last year, the economy grew by 5.78%.

The curtain is closing on the earnings season this week. Stocks may move individually as more companies will report their 2013 financial results.

USDIDR inched higher to 11,438 from 11,408 on Thursday.

BKSL, ROTI

BKSL’s net profit soared 185% in 2013 to IDR630,229 million as revenues gained 54.49% to IDR961,988 million. Assets and liabilities also saw significant jump by 73.31% and 183%, respectively. EPS for 2013 stood at IDR20 vs. IDR7 a year earlier. 

ROTI’s net profit increased 5.94% in 2013 to IDR158,015 million while EPS stood at IDR31.22 in 2013 vs. IDR29.47 a year earlier. Assets and liabilities at the end of 2013 were 51.27% and 92.32% higher compared to a year earlier.

Technically Speaking...

JCI continued to struggle on Thursday but so far managed to hold its ground above 4,700.

Recent peak-turned-support at 4,661 will be the next line of defense where this level was also the prior resistance-turned-support.

As the index fell, the nearest resistance shifts to 4,802, while the next one is seen at 4,917, ahead of 5,000 which is the psychological resistance and subsequently the projection target at 5,063. 

Volume started to kick up, while MACD remains negative. RSI has curled down some more as price sagged.

Day Ahead

Barely any significant fresh catalysts out there will lead the market into conundrum. Overall, the JCI may end March with a listless day while today will also see strong flow of financial reporting as earnings season close to an end this week.

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Morning Dew - 25 March 2014

Cool in March

March inflation is seen lower than February or even deflated as prices of food commodities expected to ease. March and April tend to see lower inflation as harvest season culminates, BPS stated. Last February saw inflation slowed to 0.26% (MoM) from 1.07% seen in January, while throughout 2013 inflation was at 8.4%.

Russian economy may suffer as US and the EU are likely to impose more sanctions on the country which just annexed Crimea from Ukraine. The economy risks two quarters of recession, whilst the S&P and Fitch cut their outlook on 

Russian credit grade to negative from stable. Moody’s however, maintains the outlook at stable so far.

JCI climbed back up on Monday, maintaining its prospect of hitting 5k in the medium-term.

USDIDR fell to 11,384 from 11,431 on Monday.

Manufacturing Slowdown

US PMI for Manufacturing (Preliminary) edged lower to 55.5 in March from 57.1 a month earlier and lower than consensus of 56.5.

US Chicago Fed National Activity Index for February inched higher to 0.14 from -0.45, better than the consensus  of  0.08.

China PMI for Manufacturing fell to 48.1 in March from 48.5, against the consensus of a rise to 48.7. Reading below 50 marks contraction, above 50 means expansion.

Technically Speaking...

JCI clawed its way back above 4,720 on Monday, but short-term outlook seems fragile at the moment.

Recent peak-turned-support at 4,665 will be the next line of defense where this level was also the prior resistance-turned-support.

As the index fell, the nearest resistance shifts to 4,802, while the next one is seen at 4,917, ahead of 5,000 which is the psychological resistance and subsequently the projection target at 5,063. 

Volume continued to tick down, while MACD has turned negative. RSI has curled up a bit after some downticks.

Day Ahead

Politics, Ukraine, manufacturing slowdown and echoes from the Fed’s blueprint of its monetary policy as well as more financial results released will shape the market this Tuesday.  With weak footing on the European front and sagging US front, JCI is seen taking a step back as well on Tuesday’s session.

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Morning Dew - 24 March 2014

Fed’s Timetable

JCI ended with slight gains on Friday as the index struggled to face the impact of recent Federal Reserve meeting’s decision.

The Fed is seen completing the tapering campaign this year and within six months or so after the stimulus has been removed completely the Fed plans to start raising the rates. With just $55 billion left to remove, about six meetings will be needed, should the Fed keeps the pace of $10bn per meeting intact.

The Federal Reserve will meet in April (29 &30), June (17 & 18), July (29 & 30), September (16 & 17), October (28 & 29) and December (16 & 17). Six months after that will be in mid-2015 when the Fed plans to start raising the rates – if the economic conditions support such decision.

Crimea Annexed

Russia finally annexed Crimea, snatching it back from Ukraine. Putin’s decision to annex Crimea sparked more sanctions applied by EU and US against Russia.

It remains to be seen whether Russia will aim for more beyond Crimea. The Russian leader recently said that he won’t, however.

Sanctions implied on Russia brought some blows to the country’s credit rating. Fitch and S&P had cut the outlook to negative while Moody’s still maintain the outlook to stable.

Technically Speaking...

JCI finished the Friday’s session with slight gains even as it managed to rack up some decent gains beforehand. 

Recent peak-turned-support at 4,665 will be the next line of defense where this level was also the prior resistance-turned-support.

As the index fell, the nearest resistance shifts to 4,802, while the next one is seen at 4,917, ahead of 5,000 which is the psychological resistance and subsequently the projection target at 5,063. 

Volume continued to tick down, as well as MACD and RSI have turned negative.

Week Ahead

The impacts from Fed’s decision is likely to “taper off” next week as the market focus will return to domestic issues which will be dominated by politics. After the naming of Jokowi as canditate, the market is eager to know who will be the VP.

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Morning Dew - 21 March 2014

Party Crasher

Statements coming out of the recent FOMC meeting sent the global stock markets tumbling. The FOMC expected the tapering campaign will be over soon this year, but interest rate is expected to be at 1% by the end of 2015. For 2016, the Fed officials predicted that rate will be at 2.25%. Rate rise will depend on a wide range of data, not just on unemployment rate which tie-in has been considered obsolete.

The Fed’s plan is not a big surprise, actually. Still, the markets across the globe reacted violently as investors book profit over recent gains. Thursday’s positive showing of US stocks signals that the rout may not be prolonged and that Friday will be a recovery day or at least an uneventful day.

JCI took a heavy beating on Thursday as all sectors went red. In addition, Wika Beton set its IPO price at IDR590 while Eka Sari Lorena Transport Tbk. set its offering price between IDR825 – 1,025.

US Data Mixed

US initial jobless claims were at 320k during the week ending March 15th. The figure was higher than prior week, but lower than the consensus 322k.

US existing home sales in February fell 0.4% after deeper fall during the precious month of 5.1%. Market had expected it falling by 0.4%.

Philly Fed index jumped from -6.3 to +9.0 in March. The consensus number was at 3.2

Technically Speaking...

JCI got hammered on Thursday as the index fell beyond 4,700, exposing the next line of defense at 4,665. 

Recent peak-turned-support at 4,665 will be the next line of defense where this level was also the prior resistance-turned-support.

As the index fell, the nearest resistance shifts to 4,802, while the next one is seen at 4,917, ahead of 5,000 which is the psychological resistance and subsequently the projection target at 5,063. 

Volume continued to tick down, as well as MACD and RSI which were also turned lower.

Unfortunately for TAXI, the reco has been closed as it fell below the suggested stop level. The reco incurred 3.46% losses.

Day Ahead

After getting savaged on Thursday, Friday session for JCI is expected to be less eventful as investors will tend to wait in the sidelines for fresh new catalysts. In the mean time, the impact from Yellen’s speech will remain a drag for JCI.

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Morning Dew - 20 March 2014

Laying Out the Groundwork

US Federal Reserve slashed its bond purchasing program to $55bn or by $10bn as its FOMC meeting concluded last night.

In addition, officials predicted their target interest rate would be 1% by the end of 2015 and 2.25% in the following year. This means the Fed will keep the rate from rising until 2015.

A wide range of data will determine when the Fed will raise the rate as 6.5% unemployment rate tie-in has been considered as obsolete.

According to Janet Yellen, there will be some considerable time between the end of stimulus – expected to be this fall – and the first rate increase, interpreted by her as “six months or something like that”.

US CAD Improved

US stocks fall as a response to the Fed’s statements. The longer the rates at the low level, the more upbeat the market will be. Now that the Fed has laid out the groundwork and narrowing the uncertainties, the market naturally falls as it knows that the days of easy monetary policy are numbered

.

US current account deficit was trimmed to US$81.1b in 4Q13 from US$96.4b, better than the expected US$88b.

Technically Speaking...

JCI bounced off its support area around 4,800 and ended the day higher at 4,821.

Recent peak-turned-support at 4,791 will be the nearest key support line for JCI, whereas another support will be at 4,665 as this was also the prior resistance-turned-support.

Next resistance is seen at 4,917, ahead of 5,000 which is the psychological resistance and subsequently the projection target at 5,063. While still a long-shot, the distant 5,653 price objective is now within radar.

Volume continued to tick down, as well as MACD and RSI which were also turned lower.

Day Ahead

Stocks may take another step back this Thursday as the Fed laid out the groundwork for its monetary policy. As stimulus is bound to end this year, this would mean the next will be on interest rate hike. Expectation of rising interest rate will take some wind of out of JCI’s sails. Still, the JCI will remain supported by Jokowi’s presidential candidacy.

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Morning Dew - 19 March 2014

Fed In Focus

Eyes will be back on the Fed as the FOMC set to meet again on Tuesday and Wednesday.  While rates are expected to be held steady, the FOMC is expected to curb another US$10bn of bond buying to $55bn from $65bn.

Housing starts also dipped by 0.2% after a 11.2% increase in January. 

As data remains timid, the Fed is likely to taper another $10bn of its bond purchases when the FOMC meeting concludes on Thursday.

From Ukraine, Russia’s Vladimir Putin stated that Russia do not want to split Ukraine. 

On the domestic front, the Jokowi effect remains supportive for stocks, but the next big thing will be the naming of Jokowi’s running partner for the presidential election this year. There is the odds that PDI-P will want to see the legislative election results first before naming its candidate for the VP position.

Consumer Inflation

Housing starts barely changed in February, following a 11.2% decline in January. February’s 0.2% drop was below the consensus of a rise of 3.4%.

US consumer inflation was up by 1.1% in February. The figure was trailing the consensus.  In January, the CPI was also up by 1.6%. Excluding the volatile food and energy components, CPI were up 0.1%, matching the consensus.

Technically Speaking...

JCI slipped further to end near its support at 4,805.61, down by 1.45%. Tuesday had brought  the JCI towards its support at 4,805.61.

Recent peak-turned-support at 4,791 will be the nearest key support line for JCI, whereas another support will be at 4,665 as this was also the prior resistance-turned-support.

Next resistance is seen at 4,917, ahead of 5,000 which is the psychological resistance and subsequently the projection target at 5,063. While still a long-shot, the distant 5,653 price objective is now within radar.

Volume ticked down, as well as MACD and RSI which turned lower.

Day Ahead

The Jokowi effect may as well endure for a while, dampening the negative impact coming from global factors such as Ukraine and the prospect of China’s economy slowdown. The next big thing for the domestic affairs will be who to be chosen as the candidate for vice president accompanying Jokowi in the presidential election. Fed meeting will also be watched closely, especially whether the FOMC will signal any changes in its economic assessments and/or monetary policy.

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