Today’s Outlook:
• US stock indices fell in Thursday’s trading (11/07/24), despite Inflation data pointing to a slowdown in the US economy that makes a Federal Reserve interest rate cut possible by the end of this year. The S&P 500 fell 0.88%, retreating from its previous record level to close at 5,584.54. The NASDAQ Composite also retreated from its daily high by 1.95% and ended at 18,283.41, with Nvidia shares down more than 5.5%. In contrast, only the Dow Jones Industrial Average managed to inch up 32.39 points, or 0.08% and closed at 39,753.75. Small-cap stocks, as measured by the Russell 2000 Index, rose as much as 3.6%. The rally was fueled by expectations of a Federal Reserve rate cut in September and hopes of a soft landing for the economy, which was supported by the latest inflation data. US CPI in June fell 0.1% mom, contrary to the 0.1% increase forecast. On an annualized basis, US CPI (June) grew 3%, lower than expectations of 3.1%. Core Inflation, which excludes volatile food and energy components, rose only 0.1% mom, and rose 3.3% yoy, compared to an estimated 3.4% increase. Following the CPI announcement, Treasury yields fell as traders increased their bets on an upcoming rate cut. The odds of a rate cut in September jumped to around 93%, as indicated by the CME FedWatch Tool, although the market consensus is that the Fed will keep rates on hold at its upcoming meeting this month. Fed Chairman Jerome Powell on Wednesday stated that he has indeed seen a recent slowdown in the US economy that would lead to a soft-landing situation as expected by the central bank. Powell also told lawmakers on Capitol Hill on Wednesday that “more good data” would support the US central bank to lower interest rates. The INITIAL JOBLESS CLAIMS showed there were 222,000 jobless claims in the latest week, lower than expectations of 236,000, indicating the labor market is still tight at times.
• ECONOMIC INDICATORS: today, US PPI will follow where forecasts expect producer prices of goods & services to grow 2.3% yoy in June (slightly heating up from 2.2% in the previous period); and 0.1% on a monthly basis (bouncing back from 0.2% deflation in the previous month). Furthermore, the market will pay attention to important views related to Inflation & consumer expectations, as well as business sentiment to be released by the respected University of Michigan.
• ASIA & EUROPE MARKETS: good news from the UK, which recorded May economic growth increased by 1.4% yoy and 0.4% mom, higher than expectations & in the previous period, supported by improvements in Industrial & Manufacturing Production in the same month. GERMAN CPI was released in line with expectations of 2.2% yoy, managing to ease from 2.4% in the previous month. From the Asian continent, SOUTH KOREA’s central bank has left interest rates unchanged at 3.5%. Today market participants will closely monitor CHINA’s Trade Balance data, and more importantly monitor their Export-Import growth whether they can strengthen as expected or not, as China plays a major role in world trade as the largest consumer/producer.
• COMMODITIES: OIL prices rose for the second consecutive session on Thursday, with BRENT settling above USD 85/barrel on rising hopes for a US rate cut after data showed a slowdown in Inflation. BRENT futures rose 0.4%, to USD 85.40/ barrel; while US WTI futures rose 0.6%, to USD 82.62/barrel. Slowing Inflation opens up opportunities for interest rate cuts which in turn will spur more economic activity, and lead to increased demand for energy. The US DOLLAR INDEX will also start to drag down and become the next support for oil prices, as a softer greenback will increase the spending appetite of non-US buyers. On the other hand, some still believe that the outlook for global oil demand is still weak. In its monthly report, the International Energy Agency (IEA) sees global demand growth slowing to below one million barrels per day this year and next year, mainly reflecting a contraction in CHINA’s consumption. However, the OPEC producer group in its monthly report on Wednesday kept its global demand growth forecast unchanged, at 2.25 million barrels per day this year and 1.85 million barrels per day next year.
• JCI still insists on playing in the critical Resistance region of 7300, even this time forming a Doji-like candle which indicates the vulnerability of a pullback shortly. NHKSI RESEARCH sees the nearest Support is around the MA10 / 7210- 7200 stretch which should be the first support for this fairly strong short-term Uptrend. The advice to start setting Trailing Stops still stands at this time.
Company News
• WIFI: Surge Partners NTT e-ASIA to Speed Up Internet Infrastructure Expansion
• MBMA: Merdeka Battery Materials Spends USD1.2 Million on Exploration, Here are the Results
• WIKA: Pefindo Gives WIKA idBBB- Rating, This is the Trigger
Domestic & Global News
Prabowo-Gibran Seeks to Increase Debt to 50% of GDP, Airlangga Says: State Budget Deficit is Below 3%
VinFast Seeks IDR 4 Trillion Loan in Indonesia
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