Today’s Outlook:

• The Dow Jones Industrial Average rose on Thursday (17/10/24) to its fourth record close in the last five sessions, on the back of stronger-thanexpected monthly Retail Sales data showing US consumers still have healthy purchasing power, and an upbeat forecast from Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest chipmaker lifted chipmaker stocks in the Technology sector. Shares of the US-listed chipmaker jumped 9.8%, while artificial intelligence sector favorite and TSMC customer Nvidia gained 0.9%. Optimism spread to other chip stocks, sending the broader Philadelphia SE Semiconductor index climbing 1% higher.

• MARKET SENTIMENT:

– US Retail Sales increased 0.4% in September, slightly higher than the expected 0.3%, while weekly jobless claims fell unexpectedly to 241k, from 260k in the previous week. Despite the lower-than-expected drop in Industrial & Manufacturing Production (Sept), the above data still confirmed healthy growth in the world’s largest economy, while the public maintained 89.4% bet on a 25 basis points rate cut at the next Federal Reserve meeting, according to CME FedWatch.

– A moderately optimistic start to the third-quarter earnings season, strong economic data, and the Fed starting its policy easing cycle have pushed the Dow Jones Industrial Average and S&P500 to record highs in recent sessions, where the S&P500 has approached the psychologically important 6,000 mark. The S&P 500 and NASDAQ Composite closed flat, while the DJIA rose 161.35 points, or 0.37%, to 43,239.05. While the Dow rose for the second day in a row, small-cap indexes fell. The Russell 2000 fell 0.3% and the S&P Small Cap 600 fell 0.2%, a day after closing at its highest level in almost 3 years.

– WHAT TO EXPECT TODAY: Building Permits & Housing Starts (Sept), as well as some comments from Fed officials such as Bostic, Kashkari, & Waller.

• FIXED INCOME & CURRENCY: US TREASURY YIELD crept up, the 10-year bond yield increased by 7.5 basis points to 4.091%. US DOLLAR is at its strongest position in 2.5 months and climbed 12 days over the last 14 trading days.

• ASIAN MARKETS: investors are bracing for a slew of top-tier economic data this Friday which includes: JAPAN INFLATION and the main highlight is CHINA GDP. Other Chinese economic indicators – September Retail Sales, house prices, Industrial Production, unemployment and investment – will also be released. But all eyes will be on third quarter economic growth and how close it is to the 5.0% mark which is Beijing’s target for 2024, but which most analysts say is unachievable at present. The recently announced wave of fiscal stimulus came too late to boost growth this year but has prompted some economists to raise their forecasts for 2025. Overall, analysts remain quite pessimistic, their consensus in a Reuters poll being that GDP grew only 4.5% in the third quarter on an annualized basis, slowing from 4.7% in the previous quarter. For 2024 as a whole, they expect the economy to grow by 4.8%, below the government’s target, and forecast a further slowdown next year to 4.5%. Investors have realized that fiscal, monetary, and liquidity support from the Chinese government, no matter how successful, will take time to bear fruit. This may have been reflected in the third consecutive decline in Chinese stocks on Thursday – the benchmark Shanghai stock index is down 15% from its peak on October 8, although still up around 18% since the first stimulus measures were launched last month.

– JAPAN this morning released its September inflation figures, with the National Core CPI coming in at 2.4% yoy; although 0.1% higher than the 2.3% forecast, it was true to economists’ estimates that they were expecting a marked slowdown from August’s 2.8%. That would be the biggest monthly decline since February last year. This would also support the thinking of the BANK OF JAPAN which favors a cautious approach to tightening monetary policy. The BOJ is expected to delay raising rates again this year, according to a minority of economists in a Reuters poll published this week, although nearly 90% still expect rates to rise by the end of March. The decision may also be based on the fact that Japan’s Sept Export – Import growth plunged below forecasts, proving the economy needs more incentives than tightening.

• EUROPEAN MARKETS: Speaking of Inflation, EUROZONE CPI (Sept) came out at 1.7% yoy, 0.1% lower than consensus 1.8%, and managed to ease from the previous month 2.2%. This data justified the ECB’s move to immediately cut interest rates on the same day yesterday Thursday, from 3.65% to 3.40%.

• COMMODITIES: Crude OIL prices edged higher on Friday, supported by a surprise drop in US oil stockpiles and a heated MIDDLE EAST CONFLICT, but prices headed for their biggest weekly loss in over a month on lingering fears of sluggish demand. BRENT prices rose 0.2%, to USD 74.61/barrel while US WTI crude was at USD 70.84/barrel, up 0.2%. Both contracts closed higher on Thursday for the first time in 5 sessions after data from the Energy Information Agency (EIA) showed that US crude, gasoline, and distillate inventories fell last week. However, US crude oil production hit a record high of 13.5 million barrels per day last week, according to the same EIA data, adding to concerns about rising supply as Libyan production resumes and as OPEC+, plans to end voluntary production cuts in 2025. This week Brent and US WTI have slumped around 6%, the biggest weekly decline since September 2, after OPEC and the International Energy Agency cut their forecasts for global oil demand in 2024 and 2025 and easing concerns about potential Israeli retaliatory strikes on Iran’s energy infrastructure.

• JCI rallied 86.1pts / +1.13% securing itself to 7735 level, distancing JCI position from potential further consolidation, and changing the direction of travel north back towards the All-Time-High level in the range of 7800-7900. NHKSI RESEARCH sees positive domestic sentiment that is increasingly taking shape from the new President Prabowo’s cabinet line-up seems to bring a breath of fresh air, while also inviting foreign funds back into the market amounting to IDR 1.20 trillion (RG market), after yesterday’s index movers were dominated by big bank stocks and other old-school bluechips. RUPIAH exchange rate stabilized at 15490/USD thanks to BI’s recent RDG decision.

Company News

• BLES: Increase Portion, Tancorp Buys 66.8 Million BLES Shares at IDR 220-233 per Share
• ESSA: ESSA CEO Talks about Financial Performance Prospects for Semester II/2024
• RMKE: RMK Energy Recorded Coal Sales Up 40.2% in the Third Quarter/2024

Domestic & Global News
Free Nutritious Meals Contribute IDR 4,510 Trillion to GDP in 2025, Indef Study Results
Hamas Leader Sinwar Killed by Israeli Troops in Gaza, Netanyahu Says War Will Go On

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