Today’s Outlook:

• Global equity indexes rallied on Wednesday while US Treasury yields fell after data showed US core inflation rose less than forecast in December, raising hopes that the Federal Reserve could cut interest rates further. On Wall Street, all three major indices recorded their biggest daily percentage gains since November 6, the day after the US presidential election. The Dow Jones Industrial Average rose 703.27 points or 1.65%, the S&P 500 jumped 1.83%, and the Nasdaq Composite skyrocketed 2.45%. The global MSCI index appreciated 1.53%, which put it on track for its biggest daily gain (in percentage terms) since September 19. The STOXX 600 European equity index also closed up 1.33%.

• MARKET SENTIMENT: Earlier, US Bureau of Labor Statistics data showed that the consumer price index (CPI) rose in line with expectations at an annual rate of 2.9% in December, compared to 2.7% in November. However, core inflation, which excludes food and energy prices, rose by 3.2%, which was below the consensus of 3.3%. After the release of the data, investors estimated the chances that the Fed will cut interest rates twice this year, where the first rate cut will probably occur in June. However, the threat of Inflation has not completely disappeared as the potential for higher tariffs from the incoming Donald Trump administration (plus changes to his immigration policy to become stricter) could potentially trigger inflation to heat up & have a negative impact on the economy this year, as reported by the Federal Reserve’s Beige Book released last Wednesday.

– Other positive sentiments coloring the market were stellar Q4 results from companies such as JPMorgan, which reported its largest annual profit ever recorded, leading asset manager BlackRock, which recorded record assets of $11.6 billion, and Goldman Sachs, whose profits more than doubled in the last three months of the year; not to forget Wells Fargo up nearly 7% after the lender reported above expectations performance in Q4/2024, supported by stronger investment banking revenues.

– Despite the Nasdaq’s high, shares of various social media companies fell after the Washington Post reported that President-elect DONALD TRUMP is considering issuing an executive order to prevent a ban on TikTok once he takes office.

– Other important economic indicators will still be released there today: Initial Jobless Claims, Philadelphia Fed Manufacturing Index (Jan), US Retail Sales (Dec).

• CURRENCY & FIXED INCOME: The US DOLLAR trimmed earlier losses but still fell against a basket of currencies after CPI data emerged. The Japanese YEN was also boosted by traders estimating a 70% chance that the BANK OF JAPAN will raise interest rates in January after Governor Kazuo Ueda said policymakers will discuss the option next week.The DOLLAR INDEX, which measures the greenback’s strength against a basket of currencies including the yen and euro, fell 0.08% to 109.11. After hearing of a peace deal in the Middle East region, the Dollar fell 0.47% against the Israeli SHEKEL in active trading.

– The EURO was down 0.16% at $1.029 while against the Japanese Yen, the Dollar weakened 0.91% to 156.52. The POUNDSTERLING exchange rate strengthened 0.16% to $1.2237.

– US TREASURY YIELD fell after inflation data implied that the option of raising interest rates this year (which was considered), may not be necessary for now. But when or how much the Fed will cut rates is still up for debate. The yield on the benchmark 10-year US Treasury note fell 13.5 basis points to 4.653%, from 4.788% late Tuesday. The yield on the 30-year bond fell to 4.8774% from 4.985%. The yield on the 2-year note, which typically tracks Federal Reserve interest rate expectations, fell 9.7 basis points to 4.268%, from 4.365% late Tuesday.

• COMMODITIES: OIL prices rallied on the back of a large draw on US crude stockpiles and potential supply disruptions from new US sanctions on Russia.However, oil gains were limited as the US and Qatar said negotiators reached an agreement to end the war in Gaza between Israel and Hamas, after 15 months of bloodshed. Fed rate cuts that are likely to continue thanks to tame US Inflation data also supported projections of higher economic growth after the prospect of lighter borrowing costs, which in turn will increase demand for energy. As a result, US WTI closed surging 3.28% at $80.04 per barrel and BRENT closed at $82.03 per barrel, pumping 2.64% on the day.

– GOLD spot prices rose 0.67% to $2,695.21 per ounce. US Gold Futures rose 1.12% to $2,707.60 per ounce.

• EUROPE & ASIA MARKETS: Inflation figures at the consumer level were also monitored by market participants in the UK as they managed to tame Dec CPI to 2.5% yoy, even lower than forecast and the previous month’s position at 2.6%. From the same country, today they will monitor Industrian & Manufacturing Production for Nov. GERMANY will report CPI later in the day, but forecasts are preparing investors for the Dec Inflation figures which are likely to be hotter than Nov.

– SOUTH KOREA’S impeached President Yoon Suk-Yeol is finally officially in custody after a 10-hour interrogation at the headquarters of the Corruption Investigation Office for High Officials (CIO), after being arrested at his residence. Yoon Suk Yeol was detained for his unwillingness to provide detailed information about the previous horrendous martial law incident.

– The Biden administration has added more than two dozen CHINA companies to the US blacklist, leaving companies on the list unable to receive exports of goods or technology without a license, which the US government is generally bound to refuse. Included on the blacklist is Zhipu AI, whose investors include Alibaba and Tencent, which is allegedly advancing China’s military modernization through advanced AI research. Another one is Huawei-linked Sophgo, which has been on the list since 2019 and is now at the center of China’s AI development ambitions. The US Department of Commerce has strengthened controls on the flow of chips to China to prevent their products from falling into Huawei’s hands.

• INDONESIA: Bank Indonesia Governor, Perry Warjiyo yesterday Wednesday unexpectedly cut the benchmark interest rate by 25bps, bringing down the BI7DRR to 5.75%. This pre-emptive action was taken when the Rupiah exchange rate was still floundering around 16,355/USD and had even reached a high of 16,410/USD shortly after the rate cut. Market observers see the action taken before the US Inflation data comes out as translating that Indonesia’s economic conditions are indeed slowing down, amidst the urgent need for domestic funds, especially in meeting the target of the Free Meal Program (MBG) which is proposed to be added another Rp 140 trillion this year, after the budget allocation of Rp 71 trillion that has been set, according to Coordinating Minister for Food Zulkifli Hasan.

• It is known that Singapore, the US, and China are the destinations for the flow of money from Indonesia, with Singapore being the main destination country. Data from the Center for Financial Transaction Reports & Analysis, aka PPTAK, recorded the amount of fund transfers from Indonesia to Singapore reaching IDR 4806.3 trillion during 2024, a much higher figure than to other countries, for example the US where money from Indonesia was fled there amounting to IDR 1447.9 trillion or only 30% of the value of fund transfers to Singapore.

– On the other hand, JCI rejoiced after the central bank decision, bringing the main index soared 1.77% / +122.9pts to 7079.56 level after successfully maintaining the psychological support around 7000. Started to detect foreign buying flow in several bluechip stocks, with total Foreign Net Buy yesterday amounting to IDR 593.86bn (all market). MSCI Indonesia aka EIDO finally bounced back 2.5% from its 52-week low. NHKSI RESEARCH thinks the bullish sentiment is likely to continue today, to attempt to break through the two Moving Average Resistance at 7100 level, before freeing JCI’s way to TARGET: 7200 / 7300.

Company News

• CPRO: Paid off! CPRO is Free of USD76.51 Million SFA Debt
• INET: Sinergi Inti Uses Most IPO Proceeds for Subsidiary Capital
• INCO & PTRO: INCO Affirms IDR 16T Contract with PTRO in March 2025

Domestic & Global News
DHE Requires 1-Year Storage, BI Prepares 2 New Instruments for Export Proceeds Foreign Exchange
Israel, Hamas Reach Ceasefire Deal to End 15 Months of War in Gaza

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