US (US) inflation in July rose 5.4% YoY, exceeding the market projection of 5.3%. Meanwhile, monthly inflation was 0.5% or in line with market expectations. Yesterday, all benchmark series Government Securities (SUN) recorded yield increases, with the short tenor FR0086 rising 2.5 bps to 5.17%.
From the domestic market, JCI was able to rebound from the decline at the beginning of the week, supported by strengthening in 9 of the 11 main sectors. Selling pressure from foreign investors was seen to continue in Bukalapak.com Tbk (BUKA) shares; although there were also buying actions in big caps stocks such as BBCA, UNTR, and TLKM. Towards the end of the week, JCI still has the potential to continue rally with a range of movement at 6,070 – 6,220.
A number of investors are reducing safe haven instruments such as Sukuk, and are interested in riskier assets such as stocks.
In the second week of August, JCI was still under pressure with the decline led by the Technology sector. With the lack of new positive domestic sentiment, market players will pay close attention to indications of the start of tapering policy from the Federal Reserve. Technically, JCI is projected to be in a lower range of 6,000 – 6,150 area.
Most of the yields on Government Bonds (SUN) posted gains yesterday, with yields on FR0087 rising 1.5 bps to 6.29%.
Domestically, the JCI continued its correction with 9 out of 11 sectors closed lower, and foreign net sell transactions reaching IDR 670 billion. Market participants will observe the impact of the government’s decision to extend the implementation of PPKM Level 4 until August 16, 2021. Today, JCI still has a chance for technical rebound with a range of movement at 6,100 – 6,260.
SUN Yield Mixed, in the Middle of Cadev Increase. The yield of 10-year Government Bonds (SUN) closed at 6.28%.
Approaching the second week of August, JCI’s movement may potentially be influenced by domestic sentiments. Firstly, investors will wait for more companies to report their Q2/2021 performance.
Throughout last week, JCI was able to strengthen by 2.2%; supported by the accumulation of foreign net buys worth IDR 1.2 trillion. Investors will pay close attention to the PPKM policy decision, which is scheduled to end today, as well as the continuation of the performance release season for the second quarter of 2021. The JCI will try to maintain its position at the level of 6,200, with a projected range of movement at 6,180-6,263.
