Today’s Outlook:

• The US stock market ended higher with a boost from the Technology sector amid quiet Columbus Day trading Monday Oct 14, while crude oil prices fell as investors parsed signs of economic weakness in China and braced for a string of standout corporate earnings. Large-cap growth stocks in the Technology sector provided much of the upside strength, putting the Nasdaq on top; while the blue-chip S&P 500 and Dow Jones Industrial Average both hit fresh record closing highs. The DJIA rose 203.14 points, or 0.47% to above the 43k level for the first time, the S&P 500 gained 0.78%, and the NASDAQ Composite soared 0.87%. Oil Prices fell and the US Dollar was flat as downbeat news from China fueled fears of weakening global demand. Market sentiment was shaped by earnings reports of major companies due for release in the rest of the week including Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, and Netflix. With 41 S&P 500 companies expected to report their results this week, this flood of fresh data from corporate America will help investors assess the health of the US economy, and whether companies can continue to justify already expensive stock market valuations. Bank earnings may raise hopes that their solid performance could help equity markets continue their strong rise into 2024. However, with current high stock valuations (the S&P 500 is trading at 21.8 times P/E ratio, compared to the long-term average of 15.7), the company’s numbers may struggle to meet investors’ expectations. The S&P 500’s annualized Q3 earnings growth is estimated at 4.9%, according to LSEG data on Friday.

• FIXED INCOME & CURRENCY: The bond market was closed in commemoration of Columbus Day, and there were no earnings reports or economic data to impact investor sentiment. Market participants’ attention moves to the end of the week, with Retail Sales, Industrial Production, and Building Permits among the scheduled data releases. The US DOLLAR touched its highest level in 10 weeks, extending gains triggered by economic data supporting a modest interest rate cut from the US Federal Reserve. The DOLLAR INDEX (DXY), which measures the greenback’s strength against a basket of currencies including the Yen and Euro, rose 0.18% to 103.23, with the Euro down 0.31% at USD 1.0903. Against the Japanese Yen, the Dollar strengthened 0.42% to 149.76.

• ASIA & EUROPEAN MARKETS:

– As known, CHINA pledged on Saturday to significantly increase debt in its efforts to revive the world’s second largest economy, yet its lack of details disappointed investors. This was followed by yesterday’s Trade Balance report showing a sharp slowdown in Chinese Export growth at 2.4% yoy in Sept, which fell short of expectations of 6.0% (this was already down from the previous month’s 8.7%), underlining the need for strong stimulus. Although New Loans grew strongly in Sept at CNY 1590bn (significantly above estimates & previous month’s CNY 1bn), it is suspected that this was not to support corporate expansion but rather to sustain daily operations/life, as evidenced by Chinese Total Social Financing (Sept) which expanded CNY 730bn from Aug’s CNY 3030bn, the largest in 6 months.

– Speaking of other ASIAN markets, this morning SOUTH KOREA has also reported Export & Import price conditions (Sept) which seems to be experiencing the same weakness. INDONESIA’s Trade Balance data follows later in the day around 1100WIB with an expected growth in Exports & Imports supporting a surplus that will probably be around USD 2.83bn in Sept, not much different from Aug’s position at USD 2.89bn. JAPAN will release its Industrial Production (Aug) figures which still seems unable to rise from contractionary conditions. As for yesterday emerging markets stocks edged up 0.02%; while MSCI’s index of Asia Pacific shares outside Japan closed 0.02% lower at 613.46, while JAPAN’s NIKKEI actually gained 0.57%.

– EUROPEAN stocks hit a 2-week high at the close of a volatile session as investors largely ignored China’s stimulus plans and focused on earnings season and the EUROPEAN CENTRAL BANK policy meeting to be held later this week. MSCI’s worldwide stock index rose 4.37 points, or 0.51%, to 857.10. The STOXX 600 index rose 0.53%, while the FTSEurofirst 300 Europe index gained 11.55 points, or 0.56%. From the UK, today there will be a number of labor-related data such as Wage + Bonus growth (Aug) and Claimant Count Change aka unemployment data (Sept). While from EUROZONE & GERMANY will also be monitored Industrial Production data (Aug) as well as ZEW Economic Sentiment in Oct for the next 6-month outlook.

• COMMODITIES: Crude OIL prices fell as OPEC lowered its 2024 and 2025 oil demand growth outlook, while China’s oil imports fell for the fifth consecutive month. Overall, China’s Sept imports only grew 0.3% yoy, much weaker than the 0.9% predicted and Aug’s 0.5%. US WTI crude oil slumped 2.29% to USD 73.83/barrel, while BRENT fell 2.0% to USD 77.46/barrel. In terms of other commodities, GOLD eased from a week high opposite the greenback’s position. Gold spot price fell 0.12% to USD 2,652.68/ounce.

• JCI was finally able to close above the first Resistance or MA10 (after almost a month of sinking below it), above the 7540 level which is now changing its role to the nearest Support. The strengthening of JCI yesterday by 39pts / +0.52% to 7559.66 was actually still colored by foreign net sell of IDR 247.49 billion; but at least technically the Closing position opens the potential for further strengthening at least towards 7650. NHKSI RESEARCH feels it is important for JCI to close above that level to neutralize the threat of further consolidation. Therefore, investors/traders need to pay attention to bullish strength as we approach the critical resistance, before deciding for more aggressive positioning.

Company News

• PYFA: Pyridam Farma Aims to Acquire 7 Companies After Probiotec
• ENRG: Bakrie Oil and Gas Issuer Acquires 100% Participating Interest in Sengkang Block
• BUMI: Bumi Resources Targets to Complete Coal Downstreaming Study Next Year

Domestic & Global News
Prabowo Asks Sri Mulyani to Become Finance Minister Again
Global EV Sales up 30.5% in September as China Shines, Europe Recuperates

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