Today’s Outlook:

• Global stock indexes edged lower on Friday, reversing early session gains as investors digested data showing US inflation cooled in May in line with expectations, while US bond yields turned higher. Uncertainty surrounding the imminent US and FRENCH legislative elections helped offset the initial reaction in the bond market to the US inflation data. The Fed’s favorite inflation indicator, the Personal Consumption Expenditures (PCE) price index, showed that annual price growth was 2.6% in May, as expected by economists, down from 2.7% in April. While the data fueled optimism that the Federal Reserve could start cutting interest rates in September, the rally in stocks in the early session slowly faded. The MSCI, S&P 500 and NASDAQ world stock indices all hit record highs in early trading before eventually closing in negative territory. Investors were also still digesting comments made during Thursday night’s US presidential debate between Democratic President Joe Biden and his Republican rival Donald Trump ahead of the November elections. Shares of Trump Media & Technology Group briefly rose in early trading but later fell more than 11%.
• FIXED INCOME: The latest 10-year US Treasury yield was up 4.9 basis points at 4.337% versus 4.288% at the end of Thursday.
• CURRENCY: The DOLLAR INDEX, which measures the greenback’s strength against a basket of currencies, was down 0.07% at 105.82 following the PCE data. Against the Japanese Yen, the Dollar was almost unchanged at 160.71. The Yen’s decline to a 38-year low has fueled expectations of intervention by Japanese authorities to stem the currency’s weakness. On the other hand, the Euro was up 0.12% at USD 1.0714, with investors awaiting the outcome of the French general election. Concerns over the outcome of the two-stage French legislative elections that began on Sunday pushed the risk premium on French government bonds over German bonds to its highest level since the Eurozone debt crisis in 2012.
• COMMODITIES: US WTI futures fell 0.24%, and settled at USD 81.54 per barrel. Analysts from Barclays expect BRENT crude to remain in the USD 90/barrel range over the coming months. Oil prices may not change much in the second half of 2024, as concerns over Chinese demand and the prospect of higher supply from major producers will be boosted to counter geopolitical risks, according to a Reuters poll on Friday. The poll also said Brent crude is expected to average USD 83.93/barrel in 2024, while US crude averages USD 79.72. The number of active US oil rigs, which is an early indicator of future production, fell by 6 to 479 on the week, the lowest level since December 2021, as quoted by energy services company Baker Hughes. Money managers increased their net long and options positions in US crude oil futures for the week ended June 25, according to data from the US Commodity Futures Trading Commission (CFTC).
• INDONESIA: looking forward to today’s Inflation Data (June) and Nikkei Manufacturing PMI. Last week JCI was able to green 2.53% back above the psychological level of 7000, finally helped by foreign buying flow worth IDR 1.19 trillion (RG market), where foreigners bought back bluechips stocks such as BBCA TLKM BRIS TPIA BUKA. As JCI is now face to face with MA50 / 7066 Resistance, NHKSI RESEARCH feels the need to anticipate a temporary pullback to the nearest Support level.

Company News

• ICBP: Profit Soars, Indofood (ICBP) Decides to Distribute Dividend of IDR 200 per Sheet
• BAYU: Bayu Buana (BAYU) Dividends IDR 75 per Sheet
• GJTL: Gajah Tunggal (GJTL) Dividend of IDR 174 Billion

Domestic & Global News
Indonesia’s Economy in the Second Half of 2023 Overshadowed by Rupiah Weakening and La Nina
U.S.and Europe Warn Lebanon’s Hezbollah to Ease Strikes on Israel and Back off From Wider Mideast War

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