Today’s Outlook:
• The S&P 500 fell on Wednesday (12/02/25) after data showing an unexpected rise in inflation further narrowed the path for a Federal Reserve interest rate cut. Republicans in the U.S. House of Representatives unveiled a fiscal plan that would cut taxes by about $4.5 trillion over a decade and raise the federal debt ceiling by $4 trillion. The market is now pricing in just one Fed rate cut this year, which would keep the Fed Funds Rate stuck above 4.00%. The 10-year U.S. TREASURY YIELD rose 10 basis points, the yield curve steepened, the U.S. DOLLAR jumped, and the stock market corrected. The Dow Jones Industrial Average closed down 224 points, or 0.5%, the S&P 500 index fell 0.3%, but the NASDAQ Composite managed to gain a slight gain of 0.03%. Market participants are betting on just one 25 basis point rate cut by the Fed later this year after the release of US inflation data, down from about 36 basis points of easing expected in 2025. The yield on the benchmark 10-year US Treasury bond, which reflects economic growth and inflation expectations, jumped more than 10 basis points and was last at 4.65%, the highest in almost 3 weeks.
• MARKET SENTIMENT : US CPI rose more than expected in January, suggesting inflationary pressures are still there to prompt the Federal Reserve to think carefully before deciding on future interest rate cuts. Headline inflation rose by 3.0% yoy, above expectations that the reading would remain the same as December’s 2.9% pace. On a monthly basis, US CPI unexpectedly rose to 0.5%, up from 0.4% in the previous month and noticeably hotter than economists’ expectations of 0.3%. Core inflation, which excludes volatile components such as food and energy, also rose more than expected, rising 0.4% month-on-month and 3.3% year-on-year, above forecasts of 0.3% and 3.1%, respectively. Macquarie said the surprise in US inflation this time round further strengthened the case for a prolonged pause in Fed rate cuts in 2025; in line with what Fed Chairman Jerome Powell just said on Tuesday that the central bank is in no rush to cut interest rates, given that the central bank has already cut rates by 1% in 2024, and amid the fact that the US economy remains strong. In his second day of testimony before Congress, Powell said that the Fed wants to maintain a restrictive monetary policy for now, given that inflation is moving further away from the US central bank’s 2% target. US PPI will still color the US Inflation data series tonight which is also expected to produce above-expected numbers, along with the usual weekly Initial Jobless Claims data.
• – REPORTING SEASON: Cisco Systems will report its quarterly earnings after the closing bell on Wednesday, with analysts watching developments around AI-related demand for the group’s networking equipment.
• EUROPEAN & ASIAN MARKET: UK will be in the spotlight today with their preliminary 4Q GDP report, which is expected to further increase towards 1.1% yoy. Of course, this can only be achieved when there is a real positive improvement in their Industrial and Manufacturing Production (Dec) which had previously contracted in November. Speaking of Inflation, today it is the turn of GERMAN CPI (Jan) which will also be monitored, but in contrast to the US, the CPI in Europe’s number one economy is actually predicted to cool to 2.3% yoy, from 2.6% previously. Meanwhile, EUROZONE will present EU Economic Forecasts while waiting for Industrial Production data (Dec).
• – JAPANESE YEN suffered its worst day of the year against the US DOLLAR on Wednesday but is expected to bounce back on Thursday when Japan’s PPI (Jan) figures showed strong results. Japan’s producer price inflation turned out to heat up to 4.2% yoy, 0.2% above expectations of 4.0% and 0.3% higher than Dec’s 3.9%. The reading was the highest level since June 2023 and strengthens the case for further rate hikes.
• COMMODITIES: OIL prices plunged more than 2% on Wednesday after U.S. President Donald Trump took the first major step in diplomacy over the RUSSIA-UKRAINE war he has promised to end, a war that has buoyed oil prices amid concerns about global supply. Brent futures fell $1.82, or 2.36%, to $75.18 a barrel. U.S. WTI crude slumped $1.95, or 2.66%, to settle at $71.37. U.S. WTI fell more than $2 at its session low, after a three-day rally that saw Brent gain 3.6% and U.S. WTI gain 3.7%. U.S. President Donald Trump discussed the war in Ukraine in a phone call with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy. Traders said Trump’s peace talks could remove some of the risk premium from oil prices.
• – Speaking of supply, the Energy Information Administration (EIA) reported that U.S. crude oil stocks posted a larger-than-expected increase last week. The EIA raised its estimate for U.S. crude oil production, but left its demand projection unchanged. The EIA now expects U.S. crude oil production to average 13.59 million barrels per day in 2025, up from its previous estimate of 13.55 million barrels per day.
• – Elsewhere, RUSSIA may be forced to cut oil production in the coming months as US sanctions restrict its access to tankers sailing to Asia and Ukrainian drone attacks hamper its refineries. OPEC said in its monthly report that global oil demand will rise by 1.45 million barrels per day (bpd) in 2025 and by 1.43 million bpd in 2026. Both forecasts are unchanged from last month.
• – GOLD continues to climb, hitting new records almost every day. It has risen above $2,900 for the first time, and is edging closer to its new psychological target of $3,000. Gold’s current strength is coming from a combination of geopolitical uncertainty, inflation concerns, central bank policy, and continued strong demand from central banks and retail investors. So far, precious metals investors have shrugged off renewed strength in the US dollar and a rebound in bond yields, both driven by stronger US data last week.
• IHSG rebounded high as expected, from the jk.panjang support area of around 6550-6500, when the RSI indicator had entered the Oversold area, supported by the rise of bluechip stocks which had also fallen into their strong support area. The strengthening of IHSG 113 pts / + 1.75% to the level of 6645.78 gave rise to a candle similar to Bullish Piercing, but was not yet supported by foreign spending. Foreign Net Sell was still recorded at IDR 208.21 billion (all market). The RUPIAH exchange rate was still stagnant at around 16355 / USD, perhaps because the position of DXY (DOLLAR INDEX) which was still holding up because the US Inflation figures had just been released heated up. NHKSI RESEARCH assesses that yesterday’s technical rebound is still fragile, with today’s focus being to penetrate the Resistance level at 6660, before moving more freely to CLOSE THE GAP at 6830. Investors / traders are not advised to Average Up too aggressively because the global sentiment factor from US Inflation is still vulnerable.
Company News
• BRMS: BRMS Management Affirms Mining in Palu Not Affected by Demonstration
• MINA: Sanurhasta Mitra Requests Approval for Right Issue Next Month
• SRAJ: Permission Obtained, Issuer Sri Tahir Offers USD125 Million in Bonds
Domestic & Global News
Ministry of Industry to Release New Regulations, Industry Required to Report Emissions & Carbon Trading
Foxconn Reveals Opportunity to Acquire Renault’s Shares in Nissan
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