Today’s Outlook:
• The Dow closed at another record high on Thursday (14/12/23) for the second day in a row as the rally after the Fed’s dovish decision continued to push stocks higher, even as some analysts were somewhat concerned that the recent gains were too much and too fast. The rally in the three major indices including the DJIA, S&P 500 and Nasdaq has technically breached the “overbought” area above the 70 mark on the Relative Strength Index (RSI), a technical analysis indicator that shows whether a market is overbought or oversold.
• In terms of economic data, US jobless claims were light, but retail sales showed an unexpected increase. Initial Jobless Claims fell by 19,000 to 202,000 for the week ending December 9. Although the figure was below economists’ forecasts, some still see a potential weakening of the business world in the future, especially small businesses that are increasingly slow to hire workers overall, which is feared to eventually lead to more massive layoffs.
• On the other hand, the strength of consumer spending continued to strengthen, with US retail sales unexpectedly rising 0.3% mom in November as the holiday shopping season got off to a fast start. This figure was better than economists polled by Reuters forecast that US retail sales edged down 0.1%; and also managed to bounce back from a 0.2% decline in October. On an annualized basis, US Retail Sales rose 4.1% yoy in November. Although the pace slowed as households adjusted to higher borrowing costs and prices, this was still enough to stave off a recession. Analysts think that consumer resilience provides credibility for the Fed to achieve a soft landing, but on the one hand, it is also a signal to the market that the Fed will not cut interest rates as fast as the market currently expects.
• EUROPEAN & ASIAN MARKETS: Following the Federal Reserve’s decision last Thursday morning, the Bank of England and the European Central Bank also kept interest rates unchanged at their current positions: 5.25% and 4.5%. Good news from Japan which reported Industrial Production (Oct.) increased by 1.3% mom, which was above estimates and compared to 0.5% growth in the previous month. Today will see a series of Industrial Production data and preliminary PMI estimates (Dec.) from major economies across all three continents: Asia, Europe and the US.
• COMMODITIES: Oil prices rose 3% in Thursday trading extending the previous session’s gains, boosted by the weakening US Dollar and as the International Energy Association (IEA) raised its Oil demand forecast for next year. Brent closed up 3.2%, at USD76.61 per barrel. US West Texas Intermediate (WTI) crude oil closed up 3%, to USD71.58.
• The Oil market has managed to rebound after falling to its lowest level in almost 6 months on Wednesday’s session. In its monthly report, the IEA expects world oil consumption to increase by 1.1 million barrels per day (bpd) in 2024, up 130,000 bpd from the previous forecast; thanks to an improved US economic outlook and lower Oil prices triggering more demand. The 2024 forecast is less than half of the OPEC+ forecast.
• Prices also benefited from the US Dollar weakening to a 4-month low after the US Federal Reserve on Wednesday signaled lower borrowing costs for 2024. Oil traders will enter 2024 with growing concerns about issues of economic slowdown and over-supply, while heightened geopolitical tensions in the Middle East could trigger price volatility. Benchmark Brent prices have averaged around USD80 per barrel this year. A Reuters survey of 30 economists and analysts’ forecasts shows Brent crude oil averaging USD84.43 per barrel by 2024.
• Indonesian market players will monitor the Trade Balance (Nov.) figure which is forecast to come out with a surplus of USD3.05 billion, lower than the previous month. The Export & Import improvement is still somewhat limping but there is hope that November Import will be able to grow positively 0.2% yoy compared to October which is still in negative territory.JCI closed at a new Closing high this year and also back above the 7100 level which is equivalent to a 15-month high. While the bullish vibe is very much present in capital markets around the world, investors/traders need to consider whether prices have become somewhat overheated  recently and the potential for a brief consolidation. NHKSI RESEARCH foresees the need for the market to explore sector rotation that will be able to lift the JCI towards a brighter END OF YEAR TARGET of around 7350, rather than relying on a handful of sectors or conglomerates that have been overbought recently.

Company News
• JSMR: Injecting Business Entities for IDR160 Billion
• INTP: Allocate CapEx Up to IDR1.5 Trillion
• ASII: Car Sales Down 1.17 Percent

Domestic & Global News
• ADB Disburses USD 2.4 Million for National Capital Development Project
• How the World Agreed to Move Away From Fossil Fuels at COP28

Download full report HERE.