Today’s Outlook:
• US MARKET : At the closing of NYSE the Dow Jones Industrial Average gained 79 points, or 0.2%, the S&P 500 index added 0.1%, and the NASDAQ Composite fell 0.2%.
The S&P 500 ended the week lower despite cutting losses Friday, as hopes that the government shutdown could be nearing end were boosted after Senate Minority Leader Chuck Schumer proposed a deal that could re-open the government.
The U.S. Senate is expected to hold a test vote on a short-term funding bill on Sunday evening, with ABC News reporting that the measure is expected to receive enough Democrat support to pass.
ABC reported that the measure is aimed at approving government funding until January 30, citing a senior Democratic senator.
Reports of a potential breakthrough in Congress encouraged investors, as the U.S. economy grapples with its longest ever government shutdown. The shutdown entered its 40th day on Sunday, as Congress failed to approve a series of funding bills amid disagreements over healthcare subsidies.
The shutdown sparked disruptions across the country, especially in key sectors such as air travel. Traders also fretted over the shutdown’s impact on gross domestic product and employment, as thousands of federal employees became furloughed.
The shutdown also brewed more uncertainty over the economy, especially as it delayed the release of several key readingsfrom the government.
Markets were also rattled by questions over whether the Federal Reserve will cut interest rates in December. Traders were seen pricing in a 61.9% chance for a 25 basis point cut, and a 38.1% chance for a hold, CME Fedwatch showed.
• EUROPEAN MARKET : European shares ended a volatile week lower on Friday, as worries about elevated valuations of technology-related stocks persisted. The DAX index in Germany dropped 0.8% and the CAC 40 in France declined 0.2%, while the FTSE 100 in the U.K. fell 0.6%.
Despite the decline, sentiment had earlier been generally been supported by a healthy earnings season, with European firms expected to report growth of 4.3% in third-quarter earnings, on average, data from LSEG showed earlier this week, above the 0.4% increase analysts expected a week ago.
As far as economic data are concerned, German exports rose by 1.4% in September compared with the previous month, above the forecast for a 0.5% increase.British house prices increased by a stronger-than-expected 0.6% in monthly terms in October, figures from mortgage lender Halifax showed earlier Friday.
• ASIAN MARKET : Asian stock markets tumbled on Friday, heading for steep weekly losses, as a global tech sell-off deepened amid valuation concerns, while renewed U.S.-China tensions further rattled investors.
Technology shares in Japan and South Korea led the declines, while investor focus for the day was on Chinese trade figuresfor October.
Japan’s Nikkei 225 plunged 1.2% on Friday, on track to lose nearly 4% this week, dragged lower by declinesin technology-related stocks.
Data on Friday showed that Chinese exports fell unexpectedly in October after a sharp rise in the previous month, missing forecasts of a modest rise.
Imports also weakened, leading to a decline in the country’s trade balance, suggesting persistent trade pressures and weak domestic demand.
• COMMODITIES : Crude prices recovered from a midday dip on Friday on hopes Hungary can use Russian crude oil as U.S. President Donald Trump met Hungary’s Prime Minister Viktor Orban at the White House. Brent crude futures settled at $63.63 a barrel, up 25 cents or 0.39%. U.S. West Texas Intermediate crude finished at $59.75 a barrel, up 32 cents, or 0.54%.
• INDONESIA : The JCI closed higher, up +0.7% to 8,394.59, remaining above the 8,300 level after a successful breakout. Despite the all-time-high resistance level, investors should remain cautious of potential corrections and pullbacks as a negative RSI divergence has emerged. If the index manages a strong breakout above 8,400, continue to monitor your portfolio holdings closely using a trailing stop strategy.
For today’s trading session, market flows are expected to rotate into the Adaro group, where a positive catalyst from AADI’s interim dividend distribution may drive price appreciation across the group, including ADRO and ADMR.
Rotation into Old-Dividend Players & Back to Consumer: We continue to recommend allocating a portion of the portfolio toward stocks offering dividend yields above government bond returns, as well as defensive consumer goods names. This strategy helps protect the portfolio amid uncertain catalysts while taking advantage of attractive valuation–yield opportunities.
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