Today’s Outlook:

• US equity markets were closed on Thursday (09/01/25), a National Day of Mourning declared by President Joe Biden, as a final tribute to the passing of former US President Jimmy Carter who passed away at the age of 100. As for yesterday, US Treasury yields finally fell from an 8- month high (in markets that closed earlier at 14:00 local time), while the US Dollar strengthened against several other major world currencies, with investors re-evaluating the Federal Reserve’s interest rate policy for 2025 as signs of US economic resilience emerged.

• MARKET SENTIMENT: The benchmark 10-year US TREASURY YIELD fell 0.45 basis points to 4.689%. The yield peaked at 4.73% on Wednesday, the highest since April 2024. On Friday, the closely watched US NONFARM PAYROLL will provide crucial clues on the Fed’s interest rate policy outlook. The market fully expects only one rate cut of 25 basis points in 2025. This labor data adds another factor to consider in addition to the December FOMC Meeting minutes released on Wednesday that showed central bank officials are concerned President-elect Donald Trump’s proposed tariffs and immigration policies could prolong the fight against inflation. The market sell-off in government bonds continued on Wednesday after a CNN report that Trump is considering declaring a national economic emergency to provide legal justification for a series of universal levies on allies and enemies.

• EUROPE MARKETS: POUNDSTERLING headed for biggest 3-day drop in almost 2 years. The global bond selloff in recent weeks and concerns about the UK economy have kept the Pound under pressure and have also hit government bonds particularly hard, pushing yields to their highest level in 16.5 years. European stocks closed higher after slipping into negative territory in the early session. Gains in the Health Service and Basic Materials sectors offset losses in the Retail sector. The pan- European STOXX 600 closed up 0.42%.

– GERMAN Industrial Production (Nov) unexpectedly rose much stronger than expected, growing 1.5% mom instead of the forecast 0.5% and the previous month which contracted 0.4%.

• ASIAN MARKETS: Investors in Asia are approaching the end of a volatile week with hopes that the calm in the US Dollar and US bond market can provide positive sentiment to the regional market session this Friday. Nikkei futures point to a flat opening for JAPAN stocks. The Nikkei has fallen around 0.7% so far this week, underperforming the MSCI Asia ex-Japan index. CHINA stocks fell more than 5% in the previous week, their worst week in more than 2 years. It’s been a tough start to the year for Chinese investors, with equities significantly lagging regional and global peers, falling bond yields have been worrisome, and uncertainty around a possible trade war with the US deepening. According to Goldman Sachs, financial conditions in China are the tightest since last April. Across emerging markets, inflation is the tightest since November 2023. China’s latest Inflation figures released yesterday were also not very encouraging. CPI (Dec) fell 0.1% yoy from 0.2% in the previous month. PPI (Dec) also still contracted 2.3% more or less in-line with forecasts, reinforcing the view that deflationary pressures there will not end until 2025, according to Barclays economists’ forecast; not to mention if the new Trump administration in Washington follows through on its aggressive tariff threats Trump has promised to impose a general tariff of 10% on global imports to the United States and a much higher tariff of 60% on goods from China.

– Investors in JAPAN are looking for early signs that the recent wage agreement (the highest in decades) is starting to boost consumer spending. In fact, Japan Household Spending rose 0.4% mom in Nov, higher than the -0.9% forecast; providing conditions for the BANK OF JAPAN to raise short-term interest rates soon.

• CURRENCY: The DOLLAR INDEX (DXY) traded slightly below 109.54, last week’s high which is the previous high for November 2022. The DXY rose 0.12% to 109.15, with the Euro down 0.18% at USD1.0299. POUNDSTERLING was last down 0.44% at USD1.2307, having touched its lowest level since November 2023 the day before. China’s YUAN stabilized near a 16-month low versus the Dollar as the country’s central bank announced record overseas Yuan sales to support the currency.

• COMMODITIES: OIL prices closed up more than 1% as cold weather hit parts of the US and Europe, boosting winter fuel demand. BRENT crude oil futures closed up 1% at USD76.92 per barrel. US WTI (West Texas Intermediate) crude oil futures closed up 0.82% to USD73.92.

– GOLD prices rose to an almost 4-week high, supported by growing demand for safe-haven assets. Spot gold prices rose 0.27% to USD2,669.38 per ounce, trading near the highest level since mid-December. US gold futures rose 0.77% to USD2,685.00 per ounce.

• INDONESIA: despite posting an increase in Dec Consumer Confidence index to 127.7 (from 125.9 in Nov), was unable to bring JCI to close in positive territory on Thursday, slipping back 15.8pts / -0.22% to 7064.6 level; despite IDR 65.97bn foreign inflow (RG market), seemingly mini compared to IDR 1.97tn outflow recorded throughout the week. The RUPIAH exchange rate has yet to recover from 16,160 (let alone break below 16,000). NHKSI RESEARCH believes that we still need a stronger catalyst than this for JCI to break the first Resistance at 7100-7180; therefore there is no harm in returning to WAIT & SEE at the end of this week while waiting for the release of US NONFARM PAYROLL data which may have the potential to make the Fed return to their dovish path. In terms of economic data, today market players in Indonesia are looking forward to Motorcycle & Car Sales (Dec) data as well as Nov Retail Sales figures.

Company News

• WIFI: WIFI and OREX Ready to Tackle Connectivity and Cheap Internet Challenges
• SSIA: SSIA Entity Draws Loan from BCA IDR 1.41 Trillion for Compay’s CapEx
• GIAA: Garuda Indonesia’s Explanation on Merger Plan with Pelita Air

Domestic & Global News
Indonesia Limits Exports of Used Cooking Oil and Palm Oil Residue for Domestic Needs
UN Forecasts 2025 Global Economic Growth of Only 2.8%

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