Today’s Outlook:
• BYE OCTOBER, HELLO NOVEMBER! The S&P 500 closed sharply lower on Thursday (31/10/24) as shares of Meta and Microsoft in the Technology sector plunged 4% and 6% respectively, while signs of higher inflation muddied the way for future Federal Reserve interest rate cuts. The Dow Jones Industrial Average fell 378 points, or 0.9%, the S&P 500 index fell 1.9%, and the NASDAQ Composite fell 2.8%.
• MARKET SENTIMENT: besides the lackluster outlook from the Tech sector majors, there were still many performance reports for investors to digest; as they received the PCE PRICE INDEX report, the Federal Reserve’s closely monitored Inflation benchmark slowed on an annualized basis to 2.1% during Sept, cooling from August’s figure which was revised up to 2.3%. On the other hand, CORE PCE which excludes volatile items such as food and fuel, reached 2.7% yoy – faster than expectations of 2.6% and matching August’s pace. Separately, INITIAL JOBLESS CLAIMS for first-time unemployment benefits fell to 216,000 from 228,000 in the last week of data. And to top it all off, PERSONAL SPENDING (Sept) also increased to 0.5%, higher than forecast and the previous month. The figures, which indicate the strength of the US economy and the persistence of inflationary pressures, come as the Federal Reserve considers its next policy decision after cutting borrowing costs by 50 basis points in September. Speculation is rife that although next week’s Nov 17-18 FOMC MEETING will still result in a 25bps rate cut decision, it is now possible that the Fed will hold rates in place at the December meeting. This Friday will see the release of peak NONFARM PAYROLL data, along with the Oct UNEMPLOYMENT RATE as well as MANUFACTURING PMI (Oct) & CONSTRUCTION SPENDING (Sept) data which could provide further guidance for US central bank officials when they meet next week.
• COMMODITIES: The price of crude OIL extended its gains in early trade in Asia this Friday morning, following reports that IRAN is preparing a retaliatory strike against ISRAEL in the coming days. US WTI crude oil futures rose USD 1.24, or 1.8%, to USD 70.50/barrel, after closing up 0.95% in the previous session. BRENT crude oil December contract ending Thursday closed up 0.85% at USD 73.17.
– MIDDLE EAST CONFLICT: ISRAEL’S intelligence detects IRAN is preparing to attack Israel from the IRAK region (to avoid retaliatory strikes on Iran’s vital infrastructure) in the coming days, possibly before the US ELECTION on November 5. The attack is expected to be carried out from Iraq using a large number of drones and ballistic missiles.
– Oil prices were also supported by expectations that OPEC+ may delay its planned December oil production increase by a month or more, citing sluggish global demand and rising supply.
• ASIA & EUROPE MARKETS: Market sentiment in Asia will be fragile this Friday as bond yields remain elevated suppressing interest in riskier assets; as well as concerns about rising AI costs seem to be hampering the rally of large-cap Tech companies. Regional sentiment from Wall Street is not conducive after S&P and Nasdaq yesterday posted their sharpest daily losses in 2 months. There are several events that have the potential to move markets in Asia today, namely PMI reports from several countries including CHINA, then INDONESIA inflation release, and financial reports of major JAPAN companies such as Mitsui, Nomura, Mitsubishi, and others.
• FIXED INCOME & CURRENCY: The “Bond Vigilante” again showed their strength, raising yields across the developed world – except Canada – in an attempt to discipline fiscally weak governments. The bearish narrative around three main aspects: fiscal deterioration, lack of creditor supply, and strong inflation due to higher spending – dominates the current bond market sentiment. Yields are on the rise, with UK bonds feeling the most pressure in the past 24 hours following Finance Minister Rachel Reeves’ maiden budget plan on Wednesday. And on Thursday, the BANK OF JAPAN kept rates at 0.25% but left the door open for a near-term hike. For markets in ASIA, US bonds are the main focus; implied volatility and the ‘long-term premium’ are the highest in a year, and 10-year yields have climbed higher after the Fed’s first rate cut than they have since 1989.
– Another blow to Asian markets: The DOLLAR just recorded its biggest monthly gain in 2.5 years. Most Asian stock markets fell in October and the MSCI Asia/Pacific ex-Japan index plunged 4.5%. CHINA stocks fell more than 3% in October, perhaps unsurprising given the previous month’s 21% gain, while a weak YEN has helped Japan’s Nikkei 225 index post a monthly gain of around 3%.
– CHINA PMI: the Bureau of Statistics’ PMI report on Thursday showed manufacturing activity crawled back into expansion territory in October for the first time since April.
– EUROZONE: record preliminary estimate of Inflation (Oct) heating up to 2.0% yoy. Unemployment Rate (Sept) was also flat at 6.3%. No wonder Inflation is heating up GERMANY Retail Sales (Sept) strong at 1.2% mom, not contracting as expected.
• IHSG nyata adanya terlihat berjuang keras untuk dapat kembali bertengger di atas jalur uptrend yang sah, namun belum berhasil juga menembus ke atas gerbang pertama 7630, apalagi mengamankan posisi ke atas 7700. Menimbang faktor ketidakpastian yang semakin tinggi over this weekend, NHKSI RESEARCH dapat mengerti jika sell-off masih akan terjadi di market demi mengamankan capital , walau Foreign Net Sell kemarin agak sedikit melunak secara nominal, hanya terdata IDR 85.08 milyar, namun mentotalkan jual bersih asing sebulan kemarin di angka IDR 5.7 triliun.
Company News
• AMRT: Sumber Alfaria Third Quarter Profit IDR 2.3T Up 9.1 Percent
• BRPT: Slumping 25 Percent, BRPT’s Profit in the Third Quarter of 2024 Remains USD26.8 Million
• CUAN: Soaring 162 Percent, CUAN Posts USD30.44 Million Profit in Q3 2024
Domestic & Global News
Prabowo’s orders to Bahlil and Pertamina: Increase Oil Lifting & Fix Subsidies
Buoyed by Jumbo Stimulus, China Manufacturing PMI Records First Expansion in 6 Months
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