Concerns over the US economy weighed on stocks on Tuesday [26/09], after new home sales in August fell more than expected to the lowest level in 5 months. New home sales in the US in August fell -8.7% m/m to 675,000, weaker than expectations of 698,000. Meanwhile, the US Conference Board Consumer Confidence for September took a hit, falling from the previous reading of 108.7 to 103.0, missing the forecast of 105.9. Although the Current Situation Index registered a slight increase from 146.7 to 147.1, the Expectations Index experienced a more significant decline, falling from 83.3 to 73.7. This drop brought the Expectations Index below 80, a level traditionally seen as an early warning of a recession in the following year.
https://www.conference-board.org/topics/consumer-confidence/press/CCI-Sept-2023
Stocks extended their losses on rising bond yields. The yield on 10-year T-notes on Tuesday rose to a fresh 16-year high of 4.56% and ended up +2.1 bp at 4.55%. The USA500 index fell -1.47%, the USA30 fell -1.14%, and the USA100 closed down -1.51%.
Large cap technology stocks were weaker and weighed on the overall market, amid concerns that global central banks will have to keep interest rates higher for a longer period of time in order to combat inflation. Amazon -4%, Apple over -2%, Alphabet over -2%, Microsoft and Meta down over -1%. The worsening property debt crisis in China remains a challenge for global stock markets, due to concerns that the debt crisis will derail the country’s growth prospects and drag down the global economy.
Technical Review
USA100 – Extended its 3-week decline this week. In Tuesday’s trading, the index was seen trying to surpass the structural support of 14,554. A move below this support would open the door for a test of the 14,242 support and even the resistance which is the support at 13,722. However, if the 14,554 support holds, it could lead to a short rebound which would cloud the outlook. RSI is approaching oversold levels and MACD is poised in the sell zone, validating the recent decline. Currently, the price is moving below the 50-day average, halfway to the 200-day EMA or over 3% away from the current position.
Jamie Dimon, chairman and chief executive of JPMorgan Chase & Co. floated the idea that US interest rates could reach 7%, a worst-case scenario that could catch consumers and businesses off guard. Traders remain focused on the end-of-month deadline ahead of a possible US government shutdown. Source: Bloomberg.
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Ady Phangestu
Market Analyst – HF Educational Office – Indonesia
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