Today’s Outlook:
• Dow Jones and others slumped again on Monday (15/04/24), pressured by soaring US Treasury yields as stronger-thanexpected Retail Sales data seemed about to dash hopes of an interest rate cut this year; making market participants ignore strong earnings reports from banking giant Goldman Sachs. The DJIA fell 0.7%, while the S&P500 dropped 1.2% and the NASDAQ plunged 1.8%. US Treasury yields continued to creep up to Nov highs after US Retail Sales data grew faster than expected in March, pointing to consumer strength driving much of US economic growth, thereby reducing expectations of a Federal Reserve rate cut this year. The yield on 10-year US Treasury bonds jumped 11 basis points to 4.61%. The US Commerce Department said on Monday that retail sales rose 0.7% last month, topping economists’ estimates of a 0.4% gain. Following the data, some economists revised their first-quarter economic growth expectations higher and warned that a rate cut is not imminent. Morgan Stanley has even dropped the possibility of a June rate cut and pushed it back to July, bringing the total expected Fed rate cuts this year to 3 (in line with the Fed’s own projections), down from their initial forecast of 4.
• MARKET SENTIMENT: On the earnings front, Goldman Sachs and Charles Schwab bolstered positive market sentiment with their strong Q1 earnings reports; while Apple’s share price slumped 2% after data from research firm IDC indicated that the iPhone maker has lost the crown of the world’s number one mobile phone maker, overtaken by Samsung which took advantage of Apple’s weak performance in the first quarter. Meanwhile in the CENTRAL EAST, geopolitical tensions continued to grip negative market sentiment as predictions that Israel may retaliate to Iran’s attack over the weekend; opening up the possibility of the war widening and forcing investors to hoard safe-haven assets such as GOLD.
• The price of the 10-year US TREASURY fell 29/32 to yield 4.6158%, from 4.499% at the end of Friday; while the price of the 30-year Treasury note fell 63/32 to yield 4.7323%, from 4.603% at the end of Friday. THE US DOLLAR hit its highest level since early November against a number of world currencies as the Yen slumped to its lowest level in 34 years. The Yen’s movement helped revive anticipation of possible intervention by Japanese authorities. The DOLLAR INDEX rose 0.15%, and the Euro fell 0.17% to USD 1.0624. The Japanese Yen was 0.60% weaker against the greenback at 154.23/ USD, while the Pound Sterling last traded at USD 1.2445, down 0.04% on the day.
• COMMODITIES: Crude OIL prices edged lower after Iran’s attack on Israel over the weekend proved less damaging than expected. Israel claimed that it managed to ward off most of Iran’s explosive drone & missile attacks. US WTI crude fell 0.29% to USD 85.41/barrel, while BRENT settled at USD 90.10/barrel, down 0.39% on the day. GOLD surged on increased safe-haven demand triggered by geopolitical tensions. It showed that the price of Gold in the spot market soared 1.8% to USD 2,385.39/ounce.
• EUROPEAN & ASIAN MARKETS: European stocks ended marginally higher as weakness in Energy stocks capped gains in Industrial stocks, while investors kept a close eye on developments in the Middle East. The Israel – Iran war also knocked investors’ buying interest in Asia, resulting in most Asian stocks falling on Monday, while on-going concerns about US interest rates that may need to be higher for longer also weighed. Emerging market stocks slumped 1.12%.MSCI’s index of Asia Pacific shares outside Japan closed down 1.06%, while Japan’s Nikkei lost 0.74%. Chinese stocks were the only best performers earlier this week, rebounding from a one-month low as the Chinese government promised more stimulus.
• JCI will likely adjust to the bearish regional market vibe that occurred during the long Eid holiday last week. NHKSI RESEARCH expects it to be difficult for JCI to break the MA20 Resistance around 7320 and warns investors/traders to be more prepared for a consolidation move towards Support 7240/7160-7130. In the midst of increasing global uncertainty factor, we would suggest to set aside more cash portion than usual.
Company News
• PYFA: IDR1.07 Trillion Right Issue
• AVIA: Decided to Distribute IDR1.36T Dividend
• TOWR: Secured IDR2.6T Bank Mandiri Loan
Domestic & Global News
• Impact of Iran-Israel War, Fuel and LPG Subsidies at Risk of Collapse
• Israeli Military Pledges Response to Iran Attack Amid Calls for Restraint
Download full report HERE.
