Today’s Outlook:
• US stock markets closed higher on Thursday trading (15/02/24) on the back of rising OIL prices leading the overall market rally, plus the release of deeper-than-expected US Retail Sales data, fostering hopes that the Federal Reserve could start lowering interest rates in the next few months. The US Commerce Department reported US Retail Sales fell 0.8% mom in January (lower than economists’ forecast of -0.2% and from the previous month’s 0.4%) driven by sluggish vehicle and gas station sales. The data eased investors’ concerns regarding the heating US Inflation released two days earlier, which gave the view that the strength of the US economy appears to be slowing slightly. The chance that a 25bps rate cut could happen in May rose to 40%, while the probability for June is higher at 79%, as reported by CME Group FedWatch Tool. On the other hand, the labor market is still showing signs of strength as the Labor Department reported Initial Jobless Claims for the week ending 10Feb, down to 212k, from 220k in the previous week and also lower than the forecast of 219k. In response to the above data, US Treasury yields retreated from their highs yesterday, where the 2-year US Treasury which is most sensitive to interest rate movements, inched down from the day’s high yield at 4.576%. Goldman Sachs also immediately cut US economic growth in the first quarter of this year to 2.5%, from 2.9% in the previous estimate. And to top it all off, this Friday will see US Producer Price Index / PPI data (in addition to Building Permits, Housing Starts (Jan), as well as Michigan Consumer Expectations (Feb); which will give more clues on the US economy, with consensus US PPI 0.6% yoy in January, down from 1.0% in the previous month. Not to forget that corporate earnings sentiment is still part of the market drivers, where investors are optimistic that 80.3% of S&P500 companies have beaten earnings estimates, exceeding the annual average of 76%, as reported by LSEG data.
• ASIA MARKETS: Japan officially fell into a technical recession after they announced 4Q23 GDP returned to negative 0.4% yoy, after contracting 3.3% in the previous quarter. However, there was growth in their Industrial Production in Dec, up 1.4% mom from minus 0.9% the previous month. Indonesia reported their 45th consecutive Trade Balance surplus at USD 2.0 billion, which fell short of expectations at USD 2.99 billion and was clearly much lower than the previous month at USD 3.3 billion; due to a plunge in Export growth of -8.06% yoy, greater than Import growth of only 0.36% yoy.
• EUROPEAN MARKETS: A contraction in economic growth was also experienced for the first time by the UK since September 2021 or the 3rd quarter of 2021, where currently the UK 4Q23 GDP is at a level of -0.2% yoy, unexpectedly starting to fall into recession area from expectations of at least a positive 0.1%, although it is predicted to decline from the previous quarter of 0.2%. Industrial and Manufacturing Production which increased in Dec, and Labor Productivity which strengthened in Q3 have not been able to keep UK economic growth in the positive realm. Today the UK will report January Retail Sales which is also expected to be negative.
• JCI rallied to a 7365 high before finally closing down to 7303, managed to gain 93 points or 1.3% thanks to the presidential election sentiment which is full of speculation that the election will be finished in one round. The positions and candles created explain investors’ hesitation in responding to the euphoria and being more cautious in anticipating surprise factors in the period of official results count according to the KPU. At the end of this week, NHKSI RESEARCH also advises investors/traders not to be too aggressive in positioning BUY, although there seems to be trading opportunities in stocks affiliated with the candidate with the most votes.
Company News
• GGRM: Established Infrastructure Subsidiary in East Java
• ERAA: Erajaya and Erafone Extend Debt Tenor
• SIDO: Business Entity Executes IDR12 Billion Affiliate Transaction
Domestic & Global News
• Going Up Again! Indonesia’s Foreign Debt Reached IDR 6,359 Trillion Throughout 2023.
• Joining Japan, the UK is Falling into Recession!
Download full report HERE.
