Today’s Outlook:

• The NASDAQ closed at a higher record and led the US stock market gains by 0.8% on Tuesday (14/05/24), ignoring a higher-than-expected inflation report as Federal Reserve Chairman Jerome Powell said the current level of interest rates is already working effectively to curb inflation.
• The US producer-level Price Index grew at a faster-than-expected pace of 0.5% mom in April (above economists’ 0.3% expectation and up from a downwardly revised contraction to – 0.1% in March) mainly due to high costs of services and goods, signaling inflationary pressures lingered at the start of the second quarter.
• On an annualized basis, US PPI rose as estimated by 2.2% yoy – the largest increase since a 2.3% surge in April 2023. The latest figure for the previous month was also revised down to 1.8%.
• In response to the data, Morgan Stanley said the PPI data is still above the threshold that they see as convincing evidence that inflation is moving in the right direction. Similarly, Federal Reserve Chairman Jerome Powell also emphasized that the handling of inflation in Q1 did not show much progress. He does not believe that inflation will be able to fall further or stagnate, although he remains optimistic that the current monetary policy is effective in controlling people’s purchasing power and he ruled out the possibility of raising interest rates as the next step to be taken by the central bank. Powell also gave an optimistic view of the US economy by highlighting strong consumer spending and business investment when he spoke at the Annual General Meeting of the Foreign Bankers Association in Amsterdam, on the one hand it has also begun to detect a reduction in labor in various industries, causing the labor market to begin to get its balance. Powell also projected US GDP growth of 2% or better.
• Later tonight around 19.30 WIB, it is the turn for the US consumer price index, which will be in the spotlight of market participants. Inflation at the US consumer level is expected to cool to 3.4% yoy in April from 3.5% in the previous month. Complementing the data, US Retail Sales for April will also be published, which is predicted to grow 0.4% on a monthly basis, down from the previous month’s 0.7%.
• EUROPEAN MARKETS: the UK reported that their employment situation seems to be still quite strong: although the March Unemployment Rate rose 0.1% to 4.3%, average Wages grew. April’s Unemployment Count was also lower than expected, while Q4 Labor Productivity turned out to be better than forecast. Speaking of Inflation, GERMANY released April CPI which was indeed stagnant at 2.2%yoy as expected. However, Germany and EUROZONE are more optimistic about the economic sentiment for the next 6 months as evidenced by the higher ZEW Economic Sentiment (May) reading. Not to be outdone by the US, a number of important data will also come out of the Eurozone today: Industrial Production and Q1 GDP with a projected increase to 0.4% yoy from 0.1% in the previous quarter.
• COMMODITIES: OIL prices closed lower on Tuesday, as signs that inflation remains elevated dampened hopes of a rate cut just as focus turned to the latest US oil stockpiles data. BRENT oil futures fell 1.1% to $82.42 per barrel, while US West Texas INTERMEDIATE (WTI) crude futures fell 1.4% to $78.02 per barrel. There was a positive tone on Monday after CHINA’S Ministry of Finance said that it plans to start raising 1 trillion Yuan ($138 billion) through the long-awaited issuance of 20-50-year government bonds this week. The Chinese ministry said that the bonds will be used to support sluggish economic growth, and will be allocated to key sectors including infrastructure. In addition, the HUGE FIRE spreading across WESTERN CANADA has the potential to cause disruptions to Canada’s oil and gas supply, especially as it approaches major oil centers that are a key part of the North American crude oil market. Canada’s worst wildfire season ever occurred in 2023, reducing production by 300,000 barrels per day. In 2016, damage in Fort McMurray had halted about 1 million barrels per day.
• Meanwhile, OPEC in its monthly report maintained its forecast for world oil demand to rise by 2.25 million barrels per day in 2024 and 1.85 million
barrels per day in 2025, although it signaled stronger demand is likely to come as the group expects stronger global economic growth this year. The
outlook comes a few weeks ahead of OPEC+’s next meeting on June 1. Iraq’s Oil Minister, Hayyan Abdul Ghani, reportedly changed his statement on
Saturday regarding the planned production cuts, saying that Iraq had enough voluntary production cuts and would not agree to further reductions.
• INDONESIA reported strong Retail Sales in March, growing 9.3% yoy, higher than the previous month at 6.4%. Later today we will await Trade Balance (Apr.) data which is expected to result in another surplus this time of IDR 3.3 billion accompanied by positive Export Import growth. FYI foreign net sell still continues to persist, amounting to almost IDR 770 billion all market yesterday, finally spending the entire foreign net long position this year.
• JCI is predicted to potentially test Support back towards 7050-7020 after a series of attempts to break MA20 Resistance (currently at 7150) that have been fruitless in recent days. NHKSI RESEARCH advises capital market investors and traders to still maintain a WAIT & SEE attitude and pay attention to where market interest is in response to the release of US Inflation data. The Banking sector which started to show rebound efforts yesterday needs to try harder as the backbone of JCI to end this downtrend.

Company News

• TLKM: Distributing 72% of 2023 Profit Dividend
• ENRG: PGE Capital Injection USD22.8 Million
• TPIA: Additional Dividend of USD30 Million

Domestic & Global News
• Industry Favoring Cheap Gas (HGBT) Got Contracted, Economist Suggests Evaluation
• Israeli tanks push into Gaza’s Rafah, as battles rage in the north

Download full report HERE.