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Good News for JCI, Asian Stock Exchange is Happy Again

Asia-Pacific shares opened higher in trading , where investors tended to welcome the decision of the United States (US) central bank to hold the benchmark interest rate.

As of 08:31 WIB, Japan’s Nikkei 225 index shot up 1.17%, Hong Kong’s Hang Seng jumped 1.22%, China’s Shanghai Composite rose 0.26%, Singapore’s Straits Times appreciated 0.55%, Australia’s ASX 200 jumped 1 .19%, and South Korea’s KOSPI soared 2.01%.

From South Korea, consumer price index (CPI) for the period October 2023 was released today. South Korea’s CPI last month rose to 3.8% on an annual basis ( year-on-year /yoy), from 3.7% last September.

However, on a monthly basis ( month-to-month / mtm), the Ginseng Country CPI fell to 0.3% last month, from the previous 0.6% in September 2023.

Stiff inflation is the reason for South Korea’s central bank (Bank of Korea/BoK) to maintain a higher interest rate scenario for a longer period, which kept interest rates unchanged on October 19 and warned of inflation risks due to the Israel-Hamas conflict and global oil prices.

“The slowdown in inflation is expected to be more gradual than initially estimated due to geopolitical risks in the Middle East and abnormally low temperatures,” said South Korean Finance Minister Choo Kyung-ho at a policy meeting today, quoted from Nikkei Asia .

Most analysts expect the BoK to keep interest rates on hold until the first quarter of next year and cut them by 25 basis points to 3.25% in the second quarter of 2024.

Meanwhile from Australia, the trade surplus narrowed to its lowest level in two years last September, caused by a sharp decline in exports of several metals, while imports increased sharply amid increased demand for capital goods and recreational goods.

Australian exports fell 1.4% in September, from the previous month’s 4.6%, mainly affected by a decline in shipments of non-monetary metals and gold.

Meanwhile, Australia’s imports actually rose to 7.5% last September, from the previous 0% in August 2023, because many companies sent more capital goods. The surge in demand for entertainment goods such as toys and other entertainment items is also driving higher imports.

As a result, Kangaroo Country’s trade surplus fell to A$ 6.77 billion in September 2023, from the previous A$ 10.16 billion.

On the other hand, the Asia-Pacific stock exchange tends to be enthusiastic amid the brightening of the United States (US) stock market, Wall Street yesterday, after the announcement of the US central bank (Federal Reserve/The Fed) interest rate decision.

The Dow Jones Industrial Average (DJIA) closed up 0.67%, the S&P 500 shot up 1.05%, and the Nasdaq Composite ended up 1.64%.

Investors tend to welcome the Fed’s decision to hold its benchmark interest rate.

The Fed decided to hold its benchmark interest rate at 5.25-5.50%. However, the Fed emphasized that inflation has not moved as fast as they would like, so the potential for interest rate increases still exists.

This is the second time in the last two meetings that the Fed has held interest rates. The Fed last raised interest rates at the Federal Open Market Committee (FOMC) meeting on July 25, 2023.

The decision to hold interest rates is also in line with market players’ expectations.

In its official statement, the Fed said that the latest indicators show US economic activity will still be strong in the third quarter of 2023, but labor data has moved moderately. The unemployment rate is also still low and inflation is still high.

“The committee continues to set an inflation target in the range of 2%. In determining monetary policy, the committee will consider the cumulative impact of monetary tightening, the economic impact and developments in the financial sector,” wrote the Fed in its official statement.

Chairman of the Fed, Jerome Powell, at a press conference after the FOMC meeting explained that efforts to bring inflation back to around 2% were still a long way off.

The US yesterday also reported Job Openings and Labor Turnover Summary (JOLTS) labor data. The latest data shows job creation rose by 56,000 to 9.55 million in September, the highest level in the last four months. This figure is higher than market expectations of 9.25 million.

The private sector only added 113,000 workers in October, below market expectations of 150,000

Labor data is one of the things that the Fed will consider going forward.

Market players are also still waiting for financial reports for the July-September 2023 period. Of the 310 companies that have reported financial results, 79.7% showed improved performance above expectations while 16.1% were below expectations.

Source : CNBC