Today’s Outlook:

• Most stock markets plunged on Monday (13/01/25), while 10-year US Treasury bond yields touched a 14-month high as the US economy’s resilience and strong inflation continued to prompt investors to consider the possibility that the Federal Reserve will end its easing cycle. The Nasdaq had to drop 0.38%, while the benchmark S&P 500 index bounced back from a 2-month low and ended with a slight gain of 0.16%, and the Dow Jones Industrial Average appreciated 358.67 points / +0.86% to 42,297.12. The MSCI global stock index also slipped 0.25%, to 831.79. The STOXX 600 European Index lost 0.55%.

• MARKET SENTIMENT: Investors are anxiously awaiting Wednesday’s US CPI (Dec) reading, while US PPI will precede later in the evening released around 2030hrs, where consensus says US producer-level inflation may rise 0.4% on a monthly basis, versus the same figure for the previous month. Markets are bracing themselves for any upside surprise which could fuel concerns that the Fed will halt its interest rate cuts. A poll of economists polled by Reuters gave an average prediction for an annual increase of 2.9%, up from 2.7% in November, and for a monthly increase of 0.3%. As noted, investors have been haunted by fears of inflationary trends heating up again due to the tariff, migration and tax policies of the incoming administration of US Presidentelect Donald Trump. The market expects about 27 basis points of  cuts from the Fed this year, with the largest chance of 52.9% on a cut in June. The next FOMC MEETING is scheduled for January 28-29 and is widely expected to only result in an unchanged interest rate decision.

• The fourth quarter earnings season for US companies also kicks off this week with results from some of the largest US banks including JPMorgan Chase. Investors expect to see strong corporate earnings stemming from a solid economy, not from lower inflation or a weakening economy.

• ASIA & EUROPE MARKETS: CHINA reported an above expected increase in their Export – Import growth in December, resulting in a stronger Trade Balance (Dec) surplus. Today follows their New Loans data for Dec which is also expected to grow further. While in continental Europe, GERMANY & EUROZONE await the ZEW Economic Sentiment figures for their respective regions, to forecast business optimism over the next 6 months.

• CURRENCY & FIXED INCOME: The DOLLAR INDEX briefly reached its highest level in over 2 years at a peak of 110.17, before finally closing up 0.26% at 109.94. EURO fell 0.23% to $1.022. Against the Japanese YEN, the dollar weakened 0.03% to 157.64.

• The 10-year US TREASURY YIELD touched a 14-month high of 4.805% and was last up 1.6 basis points at 4.79%.

• COMMODITIES: OIL prices rose about 2% to a 4-month high as traders expected broader US sanctions on Russian oil to force buyers in India and China to look for other suppliers. US crude aka US WTI rose $2.25 to $78.82 a barrel and BRENT rose to $1.25 to $81.01. Goldman Sachs estimates that Russian vessels targeted by new sanctions transport 1.7 million barrels of oil per day (bpd) by 2024, or 25% of Russian exports. The bank affirmed its projection for the $70-$85 Brent price range to be bullish. The surge in energy prices adds to investors’ anxiety over the potential for inflation to spike, but at the same time a stronger US dollar could also reduce energy demand as it would make oil more expensive for non-US buyers. In addition, higher interest rates, which are meant to curb rising inflation, may also reduce energy demand as it will increase borrowing costs and slow economic growth.

• With the dollar strengthening, GOLD fell 0.9% to $2,664.49 per ounce. Gold is generally inversely related to bond yields & the Dollar.

• JCI also dropped, affected by global negative sentiment, down 71.99 points / -1.02% to 7,016.88, while LQ45 index fell -1.15% to 810.97. Foreign Net Sell occurred amounting to IDR 407.78 billion (RG market), RUPIAH plunged to its lowest point last December, was at a High level of 16,347 / USD, one step away from reaching the 2024 peak at 16,490. Despite the detection of RSI negative divergence on USD/IDR which implies a potential trend reversal on the current USD strengthening, NHKSI RESEARCH feels that more positive catalysts are needed to lift the JCI which is again testing the sacred Support level of 7000. Investors/traders need to realize that if JCI does not rise above its nearest Resistance 7085-7135 then there is still a threat for JCI to continue consolidation towards 6800 in this downtrend. Pay attention to the Finance sector especially the price position of large bank stocks which are mostly in the Support bottom area and waiting for a technical rebound trigger.

Company News

• ANTM & AKRA: Buy Land, ANTM Speeds Up Gresik SEZ Smelter Development
• LABA: Green Power (LABA) Joins ZTE in Solar Power Project – Photovoltaic
• GJTL: Pay off Debt, GJTL Disburses IDR 4.4 Trillion Facility

Domestic & Global News
Government Wants to Force Financial Institutions to Fund Downstream, DPR: There Should Be Incentives
Tougher US Sanctions to Curb Russian Oil Supply to China and India

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