Today’s Outlook:
• US MARKET : Wall Street indexes mostly advanced on Tuesday after the Senate approved a bill aimed at ending the longest ever U.S. government shutdown. The shutdown entered its 42nd day on Tuesday. The S&P 500 rose 0.2% to 6,846.82 points on Tuesday. The Dow Jones Industrial Average outperformed, rising 1.2% to 47,927.96 points, while the NASDAQ Composite lagged, falling nearly 0.3% to 23,468.30 points. The Nasdaq was hit chiefly by losses in NVIDIA Corporation which fell 2.9%.
The bill will now head to the House of Representatives, where the body’s Republican majority indicated it will approve the bill in a Wednesday vote. An end to the shutdown will help clear some uncertainty over the U.S. economy, given that it will allow the government to release several key economic indicators. An end to the shutdown also comes as furloughs in federal agencies caused disruptions across the country.
Nvidia retreated after Japanese tech conglomerate SoftBank Group Corp. disclosed it had sold its entire stake in the chipmaker– about 32.1 million shares for USD 5.8 billion. Softbank indicated the sale was aimed at monetizing some of its assets to free up cash it can invest elsewhere. The sale also came as the tech conglomerate clocked stronger than expected September quarter earnings.
• EUROPEAN MARKET : European stocks rose Tuesday, continuing the positive start to the week as the end to the longest U.S. government shutdown on record appears in sight.
The DAX index in Germany gained 0.6%, the CAC 40 in France climbed 0.1.3% and the FTSE 100 in the U.K. rose 1.2%. All three benchmarks posted gains of over 1% on Monday on optimism that the U.S. government shutdown was coming to an end.
Data released earlier Tuesday showed that the U.K. unemployment rate rose in September, but wage growth slowed slightly, bolstering expectations for a Bank of England interest rate cut next month. According to the Office for National Statistics, the jobless rate climbed to 5.0% in the three months to September, above the 4.8% seen the prior month. Wage growth, excluding bonuses, slowed slightly to 4.6% in the three monthsto September, from an increase of 4.7% in the three monthsto August.
The Bank of England is closely watching pay growth for signs of how persistent domestic inflation pressures are likely to prove. The central bank held interest rates at 4% last week, and hinted that it could reduce borrowing costs in December.
• ASIAN MARKET : Asian stocks were a mixed bag on Tuesday, with Japan and South Korea extending gains as a rebound in technology shares persisted, while China continued to lag on concerns over sluggish growth. Regional markets took a positive lead-in from Wall Street, which rose sharply as tech shares recouped a measure of last week’s losses, while optimism over an end to a long-running U.S. government shutdown also helped.
• COMMODITIES : Oil prices gained about USD 1 on Tuesday on the impact of the latest U.S. sanctions on Russian oil and the optimism over a potential end to the U.S. government shutdown, although oversupply concerns limited gains. Brent crude futures settled USD 1.10, or 1.72%, higher to USD 65.16 a barrel. U.S. West Texas Intermediate crude climbed 91 cents, or 1.51%, to settle at USD 61.04 a barrel. Investors continued to assess the fallout from the U.S. sanctions on Russia, and their impact on both crude oil and refined fuel markets.
Japan’s Nikkei 225 down -0.1%, while South Korea’s KOSPI jumped 1.5%. China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.7% and 0.4%, respectively, while Hong Kong’s Hang Seng index went up 0.2%.
Tech shares recovered sharply from steep losses last week, as investors appeared to have looked past concerns over inflated valuations and an artificial intelligence-driven bubble.
• INDONESIA : The JCI closed flat, slipping -0.3% into the red at 8,366.52, failing to hold above the 8,400 resistance level. Despite the all-time high (ATH) resistance, investors should remain cautious of potential corrections and pullbacks, as indicated by the emergence of an RSI negative divergence. If a pullback occurs, there remains a possibility for the index to test the 8,000–8,200 support zone. Market liquidity today is expected to remain concentrated in the Bakrie Trio stocks: BUMI, DEWA, and BRMS, where yesterday’s trading value was dominated by BUMI (20%), DEWA (9.5%), and BRMS (4.2%). Apart from these three, INET also contributed 4.2% to total trading value, driven by outlook and sentiment ahead of its jumbo rights issue intended for major expansion. Investors are advised to keep an eye on sectoral or conglomerate rotations within the 8,200–8,400 consolidation range before the index attempts to retest its alltime high.
Rotation to Old-Dividend Players and Back to Consumer: We continue to recommend allocating part of portfolios toward stocks offering dividend yields higher than bond yields, as well as consumer goods stocks as defensive plays amid ongoing uncertainty in market catalysts — taking advantage of their attractive valuation and yield potential.
Download Full Report HERE.
