Today’s Outlook:

• US stock indexes closed mixed on Monday (13/05/24) after the previous week closed with a third consecutive week of gains, with the S&P 500 yet to surpass its March record high as investors await key inflation readings and earnings reports due this week while surveys show that consumers are concerned about the inflation trend. The Federal Reserve Bank of New York survey, released on Monday, found that Americans expect inflation of 3.3% a year from now, up from 3% in March, while they expect 2.8% inflation within three years from now. On Friday, a University of Michigan report showed US consumer sentiment slumped to a six-month low in May on household concerns over the cost of living. While the NASDAQ gained 0.27%, the DJIA and S&P 500 slipped marginally lower. Both the NASDAQ and S&P500 had just posted 3-week gains, boosted by strong corporate earnings reports, and signs of a weakening labor market that fueled speculation of one or two Federal Reserve interest rate cuts this year. ISI Evercore thinks that the Federal Reserve is likely to cut interest rates twice this year starting in September, but if Inflation data does not show enough of a slowdown in September, then it is likely that the Fed will not cut interest rates at all this year. This prediction comes as the market continues to debate whether one, two or no rate cuts are needed this year. The current market consensus is still in favor of two cuts for this year.
• MARKET SENTIMENT: Investors are now focused on waiting for consumer & producer price index data, retail sales data, weekly jobless claims and earnings reports from major retailers including Home Depot and Walmart to be released this week. US consumer-level inflation is expected to increase 0.3% mom in April and 3.6% yoy according to economists forecast in a Reuters poll ahead of Wednesday’s data release. Federal Reserve Vice Chairman Phillip Jefferson said he is more likely to hold interest rates steady until it is clear that price pressures are fading. From the sentiment of FINANCIAL REPORT SEASON: Of the 459 companies in the S&P 500 that have reported earnings through Friday, 77.3% beat analysts’ earnings estimates (as reported by LSEG data); beating the long-term earnings average of 66.7%. Later this evening at around 1930hrs the US will release one of the most eagerly awaited sets of important Inflation data: US PPI (Apr.) which is predicted at 2.2% yoy & 0.3% mom, little changed from 2.1% & 0.2% in the previous month. In response to the data, market participants will also be listening closely to Fed Chairman Jerome  Powell’s comments.
• NASDAQ was buoyed by the share price of video game retailer GameStop which skyrocketed 78% after “Roaring Kitty”, the former insurance marketer credited with sparking the meme-based stock rally in 2021, returned to after a three-year break. The same significant gains were also seen in AMC which shot up 60% and Koss Corp jumped 32%. On the other hand, Alphabet fell 0.4% as Microsoft’s OpenAI looks set to launch an artificial intelligence/AI-powered search engine. Apple appreciated 2% after a report said it had reached an agreement with ChatGPT maker OpenAI to use the startup’s technology on iPhones.
• ASIA & EUROPEAN MARKETS: JAPAN has announced their in-line producer-level inflation at 0.9% yoy in Apr. More important Inflation data will be released from GERMANY, where they forecast German CPI (Apr.) to remain flat at 2.2% yoy, although on a monthly basis it increased slightly to 0.5% mom from 0.4% in the previous month. From the UK there will be more data related to employment as well as average wage growth; while the ZEW Economic Sentiment for May is likely to assess a more optimistic economic situation in May in the EUROZONE region & Germany.
• COMMODITIES: OIL prices ended higher on Monday, on the back of signs of improvement in CHINA’s economy boosting demand prospects, amid raging wildfires in Alberta that risk disrupting supply. BRENT crude futures rose 0.5% to USD 83.21/barrel, while US WTI futures rose 0.8% to settle at USD 78.92/barrel. China’s inflation data released at the end of last week sparked hopes of global demand growth in crude oil as the Chinese government’s large monetary support for its economic recovery. China’s oil imports in April have fallen slightly compared to the previous month, which is little changed from last year as the country struggles to revive its sluggish economy post-COVID. Also supporting oil prices was Monday’s news of an evacuation alert in Fort McMurray, Alberta, as uncontrolled fires raged southwest of Canada’s main oil city. Global supply will remain a key topic ahead of the OPEC+ meeting in June. Goldman Sachs expects Saudi Arabia’s crude oil supply to remain steady at 9 million barrels per day in July, compared to their previous forecast of 9.2 million barrels per day. However, over the weekend there were also reports which the Iraqi oil minister said that his country would not agree to a further supply cut, and it is unclear whether this refers to extending the current production cut period, or increasing the number of production cuts itself. Crude oil prices were also helped by the weakening US DOLLAR in anticipation of this week’s important Inflation data, where US PPI & CPI will be released on Tuesday and Wednesday respectively.
• INDONESIA recorded car and motorcycle sales in April strengthened significantly, with motorcycles jumping 18.3% yoy, compared to -7.8% in the previous month. Indonesia’s Consumer Confidence in April also seems optimistic with an increase to 127.7 from 123.8 in the previous month. This positive sentiment contributed 0.15% gain in JCI to 7099.26 level although still overshadowed by IDR 776.3bn foreign net sell (RG market). JCI is still maintained above critical support of 7050-7000 awaiting global economic data trigger that will move the market. Therefore, NHKSI RESEARCH advises investors/traders to WAIT & SEE for now, while waiting for a steadier breakout above MA10 & MA20 Resistance (above 7130-7150) before deciding to open more long positions. As for today, we will look forward to Indonesia’s Retail Sales data for the month of March.

Company News

• CTRA: Net Profit Grows 17%
• BRPT: Plans to Distribute Bonus Shares
• ITMG: Profit Plummeted 66% in 1Q24

Domestic & Global News
• Government Pours Out Industrial Estate Incentives, Here’s HKI’s Response
• Joe Biden to Double Tariffs on Chinese Products, Trade War Heats Up?

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