Jakarta, CNBC Indonesia – The main stock exchange of the United States (US) Wall Street opened in the green zone. The index turns green after US inflation plunged in May 2023.
With inflation falling sharply, the expectations of the US central bank The Federal Reserve (The Fed) will soften even more.
In early trading today, the Dow Jones index strengthened 0.36% to 34,189.2, the Nasdaq index rose 0.78% to 13,568.1 while the S&P 500 index appreciated 0.6% to 4,365.6
The green on Wall Street extended the positive trend of Uncle Sam’s main stock exchange. Wall Street has always strengthened in the last three trading days.
The Nasdaq and S&P 500 indexes even closed trading on Tuesday at their highest position in the last 13 months.
When calculated from the last low point in October 2022, the S&P has flown 20%. Yesterday’s Nasdaq close was already 30% higher than its low on December 27 last year.
Wall Street stocks turned green again at the opening today after the US reported May inflation data.
US inflation eased to 4.0% (year on year/yoy) in May 2023, from 4.9% (yoy) in April. This inflation is the lowest since March 2021 or more than the last two years.
May inflation was also lower than market expectations (4.1%).
On a monthly basis (month to month/mtm), US inflation also weakened to 0.1% in May this year, from 0.4% in April.
Meanwhile, core inflation – excluding the volatile category – was recorded at 5.3% (yoy), which is the lowest record since November 2021.
US inflation eased helped by falling energy and food prices. Energy commodity prices corrected 11.7% (yoy) in May, much deeper than the 5.1% correction in April.
Foodstuff inflation eased to 6.7% (yoy) in May, compared to 7.7% (yoy) in the previous month.
However, increases still occurred in several commodities such as apparel, housing and transportation services.
Inflation, which eased in May, further boosted market optimism for The Fed’s policies.
The market is now betting 100% if The Fed will stop raising interest rates this month.
The Fed is holding a Federal Open Market Committee (FOMC) meeting today and tomorrow (June 13-14). The Fed is expected to hold interest rates in the range of 5-5.25%.
The Fed has raised its benchmark interest rate by 500 bps since March last year.
“Weakening goods prices will provide room for the Fed to hold its benchmark interest rate this month. If inflation continues to decline, there is a possibility that the Fed will not raise interest rates again until the end of the year,” said Jeffery Roach, chief economist at PL Financial, quoted from CNBC International.
CNBC INDONESIA RESEARCH
research@cnbcidonesia.com
(is/is)
2023-06-13 13:41:23
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