Today’s Outlook:
• All three of Wall Street’s major indexes closed in the green on Thursday (12/09/24), shrugging off higher-than-expected US PPI data as market participants’ focus immediately turned to the expected Fed Fund Rate cut next week. The benchmark S&P 500 index rose 0.8%, the tech-heavy NASDAQ Composite jumped 1%, and the 30- stock Dow Jones Industrial Average added 235 points, or 0.6%. The S&P 500 and Nasdaq had both risen for four consecutive days on Thursday. The S&P 500 is just 1% away from the record high reached on July 15, and the Nasdaq which has gained 5.3% so far this week, is on track to record its biggest weekly gain this year. MARKET SENTIMENT:
— US PPI for August rose 0.2% mom, above the forecast of 0.1%. July’s figure was also revised down to show that PPI was unchanged at 0% flat, instead of edging up 0.1% as the preliminary figure, according to the US Bureau of Labor Statistics. Meanwhile, in the 12 months to August, the figure rose by 1.7% yoy after a 2.1% increase in the previous month. The Federal Reserve is expected to cut interest rates at the upcoming FOMC MEETING on September 17-18 in response to signs of labor market weakness, although there is uncertainty whether the central bank will cut the FFR by 25 basis points or a deeper reduction of 50 bps. Recently released producer-level inflation data has reinforced the possibility that the Fed will opt for a quarter bps reduction.
— INITIAL JOBLESS CLAIMS: last week’s jobless claims came in at 230k, 3k higher than the estimate of 227k and 2k higher than the previous week’s figure of 228k.
• WHAT TO EXPECT TODAY: not many economic indicators at the end of the week, other than the economic outlook from the University of Michigan, and weather conditions affected by Hurricane Francine.
• U.S. POLITICAL MAP: The latest Reuters/Ipsos poll shows Kamala Harris ahead at 47% to Donald Trump’s 42%, a slight increase from the previous poll. Harris is considered to have won in the recent debate, where she provoked Trump to be aggressive. A Harris victory is predicted to favor low-income households, but increase corporate taxes and reduce protectionism and climate change.
• ASIA & EUROPE MARKETS: Asian equity investors seem to be optimistic enough to end the week with modest gains, driven by positive regional market sentiment.
— EUROPEAN CENTRAL BANK as expected cut interest rates on Thursday to 3.65%, from 4.25% previously; ahead of the Fed’s rate cut next week. Both of these conditions could support higher ‘risk on’ appetite in Asian markets.
— JAPAN’S NIKKEI jumped 3.4% on Thursday after falling 7 days in a row, despite the YEN recording a new high this year against the Dollar. However, if the strengthening of the Yen continues, the outlook for Japanese stocks becomes uncertain again as the BOJ may have another reason to raise interest rates.
— CHINA: The SHANGHAI Composite Index on Thursday recorded its lowest close since January 2019. Shanghai’s blue-chip index is likely to end the week in the red, its fourth consecutive weekly decline and 14th drop out of the last 17 weeks. It’s been a miserable ride that has seen the index lose 15% YTD; and frankly there is no bright spot of economic fundamentals that could reverse this sluggish state. The Chinese government will release house price, investment, industrial production and retail sales figures for August on Saturday, and economists polled by Reuters generally expect the numbers to be weaker than July’s readings.
• COMMODITIES: OIL prices rallied more than 2% on Thursday (following a 2% gain on Wednesday) as traders assessed the impact of TROPICAL STORM FRANCINE on oil production in the US Gulf of Mexico. More than 730,000 barrels per day, or nearly 42%, of oil production in the Gulf of Mexico was halted by Hurricane Francine on Thursday, the US Bureau of Safety and Environmental Enforcement said. US West Texas Intermediate (US WTI) crude oil futures rose by 2.5%, to USD 68.97/barrel. BRENT crude oil futures appreciated by 1.9%, to USD 71.97/barrel. Hurricane Francine is expected to reduce overall Gulf of Mexico production this month by around 50,000 barrels per day, UBS analysts said. However, the price appreciation is expected to be short-lived as the storm’s strength begins to decline. Oil and fuel export ports from south to central Texas reopened on Thursday and refineries also resumed operations. Concerns about weak global oil demand returning, especially from the largest importer, CHINA, have weighed on prices in recent months. Brent crude futures closed near a 3-year low on Tuesday after the OPEC+ producer group cut its annual demand growth forecast for the second consecutive month. The US INTERNATIONAL ENERGY BOARD on Thursday also lowered its demand growth forecast for 2024 by more than 7% to 900,000 barrels per day, citing weak demand in China and subdued growth in other regions. The US, the largest oil consumer, is also showing signs of weak demand. Oil stockpiles in the country rose last week as crude imports increased, exports declined, and fuel demand weakened, according to data from the Energy Information Agency (EIA) on Wednesday. US gasoline prices are trending toward a 3-year low due to weak demand and abundant inventories, analysts said. US gasoline consumption represents nearly 9% of global oil demand. Market participants also paid attention to the weeks-long crisis over control of LIBYA’s central bank, which led to a reduction in oil production and exports from the country. Analysts at FGE said oil production in Libya recovered and export loading resumed, after an initial agreement was reached last week to resolve the crisis although the situation remains uncertain.
• PRECIOUS METALS: GOLD broke a new historical record at the close of trading on Thursday local time, by shooting up 1.8% to USD 2556.86/ounce, even the Futures contract gained 1.7% at USD 2585.2/ounce; triggered by US economic data consistent with soft-landing symptoms especially from the INITIAL JOBLESS CLAIMS figure and the easing Inflation trend. In terms of other commodities, PALADIUM also recorded significant gains, the price climbed 2.7% to USD 1035.69/ounce, the highest level in more than 2 months; triggered by Russian President Vladimir Putin’s comments suggesting restrictions on uranium, titanium and nickel exports as retaliation against Western countries. Palladium is a by-product of Russia’s nickel production. SILVER & PLATINUM prices did not want to be left behind, rising 2.3% and 1.8% respectively, showing the classic trend of hunting precious metals in the face of global economic uncertainty.
• JCI is steadily moving into the 7800 region, even closed just 2 points away from 7800, rallied 37.2 pts/+0.48% to 7798.15, supported by significant foreign buying flow of IDR 1.04 trillion (RG market). RUPIAH stabilized at 15425/USD. NHKSI RESEARCH expects positive regional market sentiment to keep JCI comfortably in positive territory with floating gain of almost 1% this week. The “let your profit run” advice while applying Trailing Stop is proven to be the most appropriate strategy in the current market.
Company News
• RAAM & MSIN: RAAM Private Placement Conducted, HT Issuer Deposits IDR 309 Billion
• ELSA: Trend of Weakening Crude Oil Prices, Elnusa Boss Opens Up
• KLBF: Kalbe Farma Unveils Strategy to Anticipate the Impact of Exchange Rate Volatility
Domestic & Global News
RI Plans to Import 1 Million Dairy Cows for Free Nutritious Meals, Where to Feed Them?
Tensions Escalate, US Businesses Become More Pessimistic about Doing Business in China
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