Today’s Outlook:
• The Dow Jones Industrial Average closed up 0.62% to a 1-month high at the psychological 40,000 level on Friday trading (12/07/24), slightly shifted from the record point of 40,003 reached on May 13, although it had previously reached an all-time high at the intraday level of 40,257.24. The NASDAQ Composite gained 0.62%, the S&P 500 appreciated 0.55%, as investors digested better-than-expected quarterly earnings from a number of banks on Wall Street. The 2nd quarter earnings season was opened by JPMorgan Chase, Citigroup, and Wells Fargo who released their results last Friday. Investors expect these companies to post strong earnings growth, potentially extending the rally in US stocks outside of the dominant tech sector. Analysts predict that the yoy EPS growth rate in the 2nd quarter will be the highest since the 4th quarter of 2021. Tech-heavy NASDAQ already retreated nearly 2% on Thursday, affected by sector rotation from large-cap stocks to smaller companies amid rising expectations that the Federal Reserve will cut interest rates in September. However, there is speculation from some market strategists that FED CHAIRMAN JEROME POWELL may be uncomfortable cutting rates before the Presidential Election, although that reluctance could be overridden by concrete economic data that makes it clear that the US economy is clearly slowing & a rate cut is warranted. Based on history since 1974, during the 10 months leading up to 13 Presidential Election periods, the Fed has changed interest rates 8 times and held them in place 5 times. More comments from him are awaited by market participants tonight.
• ECONOMIC INDICATORS: As a complement to CPI, US PPI (June) recorded a strengthening to 2.6% yoy (above the forecast of 2.3% & previous period’s 2.4%) due to rising service costs; while on a monthly basis also recorded growing 0.2% mom (again above forecast of 0.1% & previous period 0%). Similarly, Core PPI even moved away from the Fed’s Inflation Target of 2% at 3.0% yoy, heating up from 2.5% forecast & 2.6% previous period. This latest variation in US Inflation data, naturally overlaid with the less optimistic July Inflation & Consumer Expectations from the University of Michigan view, fell to its lowest level in 8 months, despite expectations of improved Inflation for next year and so on.
• ASIA & EUROPE MARKETS: CHINA reports a Trade Balance (June) that managed to deliver an above-expected surplus, this achievement was supported by rising Exports while Import growth was negative. June’s New Loan disbursements were also more than double the previous period’s amount as well as the estimate. However, CHINA’s Q2 GDP forecast to be released this morning is still doubtful to surpass the 5.3% of the previous quarter, so the economic growth prediction will only be 5.1%. This is certainly related to the condition of China’s Industrial Production & Retail Sales which are expected to remain weak. Speaking of Trade Balance, today is INDONESIA’s turn to report a surplus which is expected to be at USD 2.98 billion for June, as well as expectations of stronger Exports & Imports. JAPAN’S NIKKEI 225 fell 2.3% last week after hitting an all-time high… EUROPEAN stocks also reached their highest level in a month as investors focused on the latest inflation data from the US. Today they will be faced with the reality of GERMAN Retail Sales & EUROZONE Industrial Production data.
• COMMODITIES: OIL futures prices closed marginally lower on Friday as traders weighed weakening US consumer sentiment amid rising hopes of a Federal Reserve interest rate cut in September. BRENT crude oil futures fell to USD 85.03/barrel. While US WTI futures deflated 0.5%, to close at USD 82.21/barrel.
• JCI: returned to green at the end of last week to 7327.59, up 0.37% from 7253.372 at last week’s close. JCI made a 1.02% week-on-week gain, supported by growing foreign buying interest: IDR 1.09 trillion (RG market 1W). RUPIAH experienced a positive trend last week, strengthening to IDR 16,100/USD on the back of US rate cut prospect and DOLLAR INDEX retreat. NHKSI RESEARCH needs to remind once again to still set your Trailing Stop at this point while letting your profit run, amidst the RSI that has entered the Overbought territory. The next resistance that will need to be addressed is: 7375 / 7455.
Company News
• ESSA: Boy Thohir and TP Rachmat’s Issuer Profit, ESSA, Rises 418% in First Semester I/2024
• AKRA: AKR Corporindo (AKRA) Releases Shares from IDR 78 Billion Buyback
• MDKA: Merdeka Copper (MDKA) Issues IDR 2.22 Trillion Bonds, Offers 9% Coupon
Domestic & Global News
Industrial Estate Entrepreneurs Receive Blessings from the Natural Gas RPP
Mass Layoffs at Unilever, 3,200 Workers in Europe Affected
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