Today’s Outlook:

• The DJIA fell 120 points or 0.3%, but the S&P 500 and NASDAQ closed up at record highs for the second consecutive day on Tuesday (11/06/24), supported by falling US Treasury yields and a surge in Apple’s share price to an all-time high, amid a cautious stance ahead of the Federal Reserve’s interest rate decision. Apple jumped 7% to reach a record high after its AI strategy received support from Wall Street. Apple launched a partnership with OpenAI to integrate chatbot ChatGPT into its products, as the tech giant looks to expand its artificial intelligence capabilities with each iPhone upgrade cycle. The Federal Reserve begins its FOMC Meeting on Tuesday, and the central bank is expected to keep interest rates unchanged in a range of 5.25% to 5.5% on Wednesday. The monetary policy statement will also include the Fed’s updated “dot plot” plan, or outlook for interest rates, inflation, and unemployment. Meanwhile, Fed Chairman Jerome Powell’s statement is also expected to attract most of investors’ attention. In addition to the Fed decision, the May reading of the US consumer price index, which is a highly anticipated measure of inflation in the world’s largest economy, will also be released later tonight at around 7.30 pm GMT, where market participants still expect to see US CPI at 3.4% yoy, the same as the previous period. Signs of further easing in inflation could strengthen rate cut expectations, given that it is one of the symptoms of an economic slowdown; but if inflation looks too bad it could increase investors’ concerns about a potential recession that has been suppressed for months.
• FIXED INCOME: The 10-year US Treasury yield fell 7.4 basis points to 4.397% after a USD 38 billion auction of 10-year bonds delivered lower-than-expected yields, showing signs of stronger demand. Yields on 2-year, 5-year and 30-year US Treasuries also came under pressure following better-than-expected auction results.
• COMMODITIES: OIL prices closed slightly higher on Tuesday as the US Energy Information Administration (EIA) raised its global oil demand growth forecast for this year, while OPEC stuck to its relatively strong growth forecast for 2024. BRENT futures rose 0.4%, to USD 81.92/barrel, continuing a sharp rebound as oversupply concerns have receded since Brent closed at USD 77.52 a week earlier, which was its lowest level since February. While US WTI rose 0.2%, to USD 77.90. The EIA raised its forecast for world oil demand growth in 2024 to 1.10 million bpd from the previous estimate of 900,000 bpd. The Organization of the Petroleum Exporting Countries (OPEC) maintained its forecast of relatively strong global oil demand growth in 2024, citing expectations for the travel and tourism sector in the second half. The EIA also projected US crude oil production in 2024 to increase higher than previously estimated to a record production of 13.24 million barrels.
• EUROPE & ASIA MARKETS: The UK reported a number of employment-related economic indicators, including average wage growth slightly above expectations, the same figure as the previous month at 5.9%. Unemployment claims as recorded in May’s Claimant Count Change jumped significantly to 50,400, much higher than the 10,200 forecast and 8,400 in the previous month. No wonder the Unemployment Rate (Apr) has crept up 0.1% to 4.4%. Later tonight a series of more important data will be released such as: GDP (Apr), Industrial & Manufacturing Production (Apr), and Trade Balance. This morning will soon be presented CHINA CPI data which is expected to be able to heat up slightly to 0.4% yoy from 0.3% in the previous period. Similarly, Inflation at the producer level (PPI) is expected to have been able to reduce deflation to just -1.5% yoy from -2.5% in the previous period. Speaking of CPI, GERMANY releases the data this afternoon with their consumer price index forecast to come in at 2.4% yoy, still heating up 0.2% from the previous month.
• INDONESIA: Morgan Stanley downgraded Indonesia’s stock market to Underweight in its Asia & EM allocation, on the back of uncertainties regarding the direction of Indonesia’s fiscal policy and the weak Rupiah currency. President-elect Prabowo Subianto’s free lunch and milk campaign for school students is feared to impose a substantial fiscal burden, amid Indonesia’s increasingly depleted revenue outlook. The JCI fell another 65.86 pts or almost 1% to 6855.69 amid IDR 1.17 trillion foreign selling. The sluggish mood in the stock market was also contributed by Retail Sales (Apr) data which plunged 2.7% in April, in stark contrast to March’s 9.3% growth which was supported by Ramadan spending. Indonesia’s May car sales data was far from positive as it still recorded negative growth of 13.3%, although the pace of decline has slightly improved from the previous month’s minus 17.5%. Although JCI has actually reached the bottom target level of around 6850 supported by RSI POSITIVE DIVERGENCE which indicates a possible technical rebound is on the horizon, NHKSI RESEARCH believes it is still wiser if investors/traders wait for a more conducive market interest before deciding on more long positioning in the equity market.

Company News

• TPMA: Right Issue IDR 465 per Share with 1:1 Ratio, Here’s the Schedule
• GOTO: Get Buyback Approval and Change Management
• PGAS & WIFI: PGN, WIFI and IJE Collaboration Targets 2.5 Million Households and Commercials

Domestic & Global News
Prabowo as President, Indonesia’s Investment Target Increases to IDR 1,850 Trillion in 2025
Toyota Scandal Continues: Certification Test Fraud Turns Out to Violate UN Rules

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