Today’s Outlook:

• The Dow Jones Industrial Average slumped 0.8% in the last trading day of January (31/1/24), as Federal Reserve Chairman Jerome Powell said that it is unlikely that the Fed will cut interest rates in March, dashing hopes of a faster rate cut that fueled a sell-off in Tech sector stocks. The NASDAQ Composite also led the weakness in major US indices by dropping 2.2%. The Fed also added that they do not feel a rate cut is appropriate until they have sufficient confidence that Inflation is moving towards the 2% Target, and re-emphasized that future policy will depend on the emergence of economic data. This latest view on monetary policy comes after the FOMC Meeting left interest rates unchanged at 5.25% – 5.50% (as expected). Although the Fed’s statement was not as dovish as expected, US Treasury yields continued to languish in the red, where the 2-year US Treasury yield which is sensitive to changes in the Fed rate fell 9.3 basis points to 4.262%. The Fed statement was also released after the ADP National Employment Change labor report showed 107k new jobs were created in the private sector in January, lower than forecast & the previous month; after the JOLTs Job Openings report the day before showed more new job openings in December. Economic indicators awaited later tonight are the weekly Initial Jobless Claims, S&P Global US Manufacturing PMI (Jan), and ISM Manufacturing PMI (Jan).
• ASIA MARKETS: CHINA as the earliest country in the world to report Composite PMI (Jan), where they are increasingly able to move in an expansionary direction, although on the one hand the Manufacturing sector is still somewhat stuck in contractionary territory, but the Services sector (non-manufacturing) managed to help sentiment higher. Today the Asian continent will look forward to economic data from: South Korea (Trade Balance and Export – Import data), Japan – Indonesia – China (Manufacturing PMI). Also market players in Indonesia will be keeping a close eye on the Inflation report (Jan) which is expected to drop to 2.55% yoy, from 2.61% last Dec.
• EUROPEAN MARKETS: German Retail Sales (Dec) still grew negatively -1.7% yoy; on a monthly basis it also dropped – 1.6% mom, failing to meet expectations of positive growth of 0.7% even in the festive season. On the other hand, German Unemployment Rate (Jan) stayed at 5.8% same as the previous month. Preliminary estimates of German January Inflation came in at 2.9% yoy for January, beating estimates of 3.0% and clearly cooling from 3.7% in the previous month. In continental Europe today, expect a number of PMI data to also be announced by Germany, Eurozone, UK; along with Eurozone Inflation figures (Jan) which are expected to ease to 2.7% yoy from 2.9% in the previous month. The actual highlight from the UK is the Bank of England’s interest rate decision which is predicted to remain unchanged at 5.25% as well as their monetary policy outlook going forward.
• COMMODITIES: OIL prices ended lower on Wednesday, following an unexpected increase in US crude inventories, but snapped a three-month losing streak as geopolitical conflicts risked greater disruption to global crude supplies. US WTI crude futures fell 2.5% to $75.85 a barrel, despite rising 5.9% in January, while the Brent contract fell 1.4% to $81.71 a barrel, despite rising 6.1% in the previous month.
• JCI closed in the green territory, up 15.7 points to 7207.94, successfully perched above the first Support MA, supported by IDR 1.2 trillion foreign buying interest. Bank Indonesia Governor Perry Warjiyo issued an optimistic statement on Indonesia’s economic growth in 2024, given the strong economic performance in 2023 which he said is one of the best in the world, where he expects growth above 5%, Inflation under control at around 2.5%, and credit expansion in the 10%-15% range.
• With the above catalysts along with the big bank earnings releases this week, NHKSI RESEARCH predicts that JCI may still maintain its bullish aura in the market to break the following Resistance around 7250, while keeping an eye on the overall regional market sentiment. Pay attention to the Support – Resistance areas of stocks in your portfolio to determine sector rotation decisions. 

Company News
• BBRI: BRI’s Profit Reaches IDR 60.2 T in 2023
• SDRA: Right Issue 6.4 Billion Sheets
• HEXA: Recorded Profit of USD43.85 Million

Domestic & Global News
• Annual Inflation Rate Projected to Reach 2.56% in January 2024, Here are the Driving Factors
• IMF Raises Asia’s Economic Outlook This Year, but Warns China’s Property Sector

Download full report HERE.