Today’s Outlook:

• Wall Street ended in positive territory on Wednesday (14/08/24), where the S&P500 and NASDAQ recorded a winning streak of 5 consecutive sessions, on the back of US CPI (Jul) data released as expected further convincing investors that the Federal Reserve will be able to start cutting US interest rates next month. The S&P 500 closed up 0.38%, the NASDAQ Composite closed marginally higher by 0.03%, while the Dow Jones Industrial Average closed green +0.61% back above the 40k psychological level at 40,008.39. Market movements were generally subdued with many investors on vacation in August, and while economic data provided some relief, there were no new triggers for trading (other than issuers’ earnings reports), which contributed to a lackluster overall picture on the benchmark indices. US CONSUMER PRICES rose modestly in July, with the annual increase in inflation slowing below 3% for the first time since early 2021 (2.9% yoy to be precise). On a monthly basis, both CPI and CORE CPI were able to be released in-line with the consensus of 0.2% mom. This data complements the US PPI that came out the day before, also showing inflation continues to moderate, although it has yet to reach the US central bank’s 2% target. Financial markets now see a 55% chance of a 25 bps rate cut at the Fed’s September 17-18 meeting, according to the CME FedWatch Tool. Prior to this data, investors were almost evenly split between a 25-bps and 50-bps cut. Macquarie economists are even more confident that a rate cut could happen in the 3 FOMC Meeting opportunities in Sept, Nov, and Dec; provided that the disinflation trend is maintained. The Fed’s annual meeting in Jackson Hole, which will be held on August 22-24, will give Fed Chairman Jerome Powell the opportunity to flesh out his views on interest rates. Other indicators that market participants will be monitoring today are: Weekly Initial Jobless Claims and US Retail Sales to gauge the strength of the US economy in general. Fears of a recession saw the CBOE Volatility index, a gauge of Wall Street “fear”, hit its highest level since 2020 last week. However, on Wednesday, the index fell below its long-term average by 20 points for a second day and closed at 16.19. It took the VIX just 7 trading sessions to return to its long-term median of 17.6, the fastest decline ever from 35, a level associated with high levels of fear, according to Reuters analysis. The majority of the major S&P sectors were in positive territory, led by a 1.3% gain in the Financials sector.

• ASIA & EUROPE MARKETS: It was not only the US that released Inflation figures, the UK also announced their CPI for July at 2.2% yoy yesterday, which was below economists’ forecast of 2.3% but actually warmed up from June at 2.0%. On the other hand, their CORE CPI cooled slightly by 0.2% to 3.3% yoy (Jul) from 3.5% previously, even though the actual figure was lower than forecast. The UK’s 2Q GDP figure should be released this afternoon, following the EUROZONE which yesterday reported its preliminary estimate of 2Q GDP at 0.6% yoy, as estimated up 0.2% from the previous quarter. However, this figure will still be reviewed later as EUROZONE’s Industrial Production (Jun) still slips deeper into contraction territory. This morning JAPAN led the way with good news in the ASIA region, as they released 2Q GDP figures which strengthened to 3.1% yoy, higher than the 2.1% forecast and managed to turn things around from negative 2.3% growth in the previous quarter. Next up this morning it’s CHINA’s job to provide economic data around: Industrial Production, Retail Sales, and Unemployment Rate (Jul); where these data are believed to help shape Asian market sentiment throughout the day. Domestically, INDONESIA’S TRADE BALANCE surplus figure will be in the spotlight for market participants, most importantly monitored is the Export – Import growth where it is forecasted that the surplus is contributed by Exports which will be higher than Imports.

• COMMODITIES: OIL prices pared gains and ended lower on Wednesday, as a surprise increase in US crude stockpiles pointed to reduced demand for summer travel. BRENT futures fell 1.2% to USD 79.76/barrel, while US WTI dropped 1.8% and ended at USD 76.98/barrel. Data from the Energy Information Agency (EIA) showed US oil inventories actually rose by 1.4 million barrels in the week ending August 9, against an expected decline of 1 million barrels.

• JCI skyrocketed to an all-time closing high of 7436.04 after recording a 79.4pts gain aka above 1% on Wednesday, supported by Foreign Net Buy of IDR 577.91bn. The market euphoria was also supported by the strengthening of the RUPIAH exchange rate to below the 15700/USD level. Despite all these positive sentiments, it cannot be denied that JCI is entering critical Resistance territory. NHKSI RESEARCH advises investors/traders not to be careless with their respective Trailing Stop levels, but can also consider adding positions on stocks that have clearly broken Resistance at the beginning of their uptrend.

Company News
• DOID & SINI: DOID Subsidiary Secures IDR 12 Trillion Project, Dredges 60.6 Million Tons of Coal
• INKP: Sales Drop, INKP’s Profit in the First Half of 2024 Reached USD278 Million
• TINS: Timah Repays Bonds Right on Time

Domestic & Global News
After 1 Million Barrels of Production, SKK Migas Aggressively Targets Investment & Well Drilling
Entangled in Many Scandals, Japanese PM Fumio Kishida Will Step Down Next Month

Download full report HERE.