Today’s Outlook:
• A rally in global equity markets lifted stocks in Europe to record highs on Friday amid strong corporate earnings and hopes central bank interest rate cuts are near, while the dollar edged higher despite signs of slowing U.S. economic growth. European shares posted their biggest weekly gain since late January, with the pan-regional STOXX 600 index rising for a sixth straight session, while the FTSE 100 in London hit yet another record high. The DJIA led the gains with a 0.32% rise, the eighth daily gain as Wall Street’s three major indices posted weekly gains. US equity markets received support from earnings season as aggregate corporate performance beat expectations. The US Dollar turned slightly higher after investors assessed US consumer sentiment readings and sifted through comments from Fed officials. The University of Michigan’s preliminary reading of consumer sentiment came in at 67.4 for May, a six-month low and below the 76.0 estimate of economists polled by Reuters. In addition, the one-year inflation expectation climbed to 3.5% from 3.2%. The dollar index, which measures the U.S. currency against a basket of six peers, gained 0.07% to 105.29. The euro slid 0.1% to $1.077, while the yen weakened 0.17% to 155.74 per dollar. The pound posted a modest weekly loss after the Bank of England on Thursday paved the way for the start of rate cuts as soon as next month and data showed the British economy exited a mild recession in the first quarter of this year. Markets await both next week’s PPI and the CPI for signs that U.S. inflation has resumed its downward trend toward the Fed’s 2% target rate. Hotter-than-expected inflation reports last month had quashed any lingering expectations of near-term U.S. rate cuts. But markets are now fully pricing in a cut only in November, while chances of the Fed moving in September have narrowed. Treasury yields rose as traders waited on next week’s key April inflation data to guide expectations of Fed monetary policy. The yield on benchmark 10-year Treasury notes rose 5.1 basis points to 4.5%, while the two-year yield, which typically moves in step with interest rate expectations, rose 6.3 basis points to 4.8698%.
• EUROPEAN MARKETS: In contrast, markets now imply a 50-50 chance of a BANK OF ENGLAND rate cut in June and are almost fully priced-in for August. They also imply an 88% chance that the EUROPEAN CENTRAL BANK will ease monetary policy in June. BOE Governor Andrew Bailey said that there may be more reductions than investors expect; this is the latest sign of the growing divergence between the European and US interest rate outlook. Investors are currently anticipating around 42 bps of pivots this year from the Fed. In comparison, traders expect a 55 bps easing from the BoE this year, while anticipating a 68 bps cut from the ECB.
• COMMODITIES: OIL prices fell about $1 per barrel as comments from Fed officials indicated higher interest rates for a longer period of time, which could hamper demand from the world’s largest crude consumer. US WTI crude futures fell $1.00 to $78.26 per barrel and BRENT fell $1.09 to $82.79 per barrel. GOLD prices rose, heading for its best week in five, with bullion building momentum fueled by weaker US jobs data last week that strengthened expectations for the Federal Reserve to cut interest rates this year. US Gold Futures for June delivery closed 1.5% higher at $2,375.00 an ounce.
• JCI closed last week that was cut short due to the 2-day holiday commemorating the Ascension Day of Jesus Christ, in negative territory decreasing 34.82 pts / -0.49% to 7088.79, back below MA10 & MA20 signaling this downtrend has not been ended. NHKSI RESEARCH expects there to be an adjustment in JCI following the sentiments rolling in the market. Investors/traders are advised to monitor market interest first before deciding to jump into the market more, considering the number of foreign net sell is also still consistent.
Company News
• PWON: 1Q24 Profit Recorded IDR330 Billion
• ADCP: Net Profit Slashed 54%
• SCMA: IDR190 Billion Profit Tabulation
Domestic & Global News
• BPJS Kesehatan to Apply Standard Inpatient Class (Kris) No Later Than June 2025, With Fees to Be Announced Later
• Get Ready! The US Announces New Import Tariffs on China Next Week, Including Electric Cars
Download full report HERE.
