Today’s Outlook:

• Wall Street’s major stock indices closed lower on Tuesday’s trading (15/10/24), with a 1% drop in the Tech-laden NASDAQ Composite leading the losses as chip stocks fell on demand concerns while the Energy sector plunged 3% on falling oil prices. The Dow Jones Industrial Average lost 324.80 points, or 0.75%, declining from the 43,000 level just yesterday; while the S&P 500 depreciated 0.76% to 5,815.26, and the Nasdaq Composite slipped 1.01%.

• MARKET SENTIMENT: A number of earnings reports from top US companies dominated market sentiment. Although earnings from FINANCIAL giants Goldman Sachs, Citigroup, and Bank of America were positive, Nvidia and ASML stocks led the global TECHNOLOGY slump, and attention later this week will turn to Taiwan Semiconductor Manufacturing Co, a contract manufacturer that produces Nvidia processors. The company is expected to report a 40% jump in quarterly profit on Thursday, thanks to surging demand. Nvidia shares fell 4.7% after setting a record closing high on Monday and after media reports that the Biden administration is considering restrictions on the export of AI chips by US companies. Chip equipment manufacturer ASML Holdings showed gloomy expectations for 2025 sales, sending its share price tumbling 16% and automatically dragging the Philadelphia semiconductor index down 5.3% for the biggest one-day drop since early September. The ENERGY industry index closed down 3%, the largest daily percentage decline since early October 2023 as crude oil prices dropped on expectations of weaker demand after media reports suggested Israel would not attack Iranian oil targets.

• MARKET ANALYSIS: The S&P 500 had just hit an all-time high in 2024 in the previous day’s session, rising 42.3% from its lows in late 2023, marking one of the strongest 12-month rallies in history. UBS and Goldman Sachs analysts optimistically raised their year-end targets for 2024 and 2025, projecting the index could surpass 6,000 before the end of the year. As they see it, institutional investors are shifting from defensive to aggressive strategies due to “FOMU” (fear of underperforming benchmarks), and share buyback programs by companies are expected to add huge liquidity to the market, potentially injecting USD6 billion daily. With 37% of S&P 500 companies due to report earnings soon and seasonal patterns favoring strong performance, the index could reach 6,160-6,270 by year-end. Other indices such as the Nasdaq 100 and US Small Cap 2000 are also expected to perform well, reflecting the favorable conditions in an election year (US ELECTION).

• WHAT TO EXPECT: In addition to upcoming corporate earnings reports, key economic data includes Retail Sales and Industrial Production. Regarding the prospect of a FED FUND RATE cut, on Tuesday afternoon, San Francisco Fed President Mary Daly said that even after the rate cut in September, policymakers are still working to bring down inflation. Market participants estimate a roughly 98% chance that the Fed will cut rates by 25 basis points in November, according to CME FedWatch.

• ASIA & EUROPE MARKETS: UK CPI figures will be in the spotlight today where it is expected that UK Inflation (Sept) could still be kept below 2% which is the ECB Target number. In continental ASIA, SOUTH KOREA Unemployment Rate (Sept) unexpectedly rose 0.1% to 2.5%. The data came ahead of their Trade Balance and Import – Export (Sept) announcement. Meanwhile in neighboring Japan, JAPAN reported weak Core Machinery Orders in Aug, surprisingly contracting -3.4% yoy, from 8.7% in the previous month, and failed to meet expectations of positive growth despite narrowing to 3.6%. Meanwhile, investors continued to digest the latest information from CHINA on its stimulus measures, where the government announced that it will hold a press conference on Thursday to discuss promoting the development of a “stable and healthy” property sector.

• COMMODITIES: OIL prices plunged more than 4% to a 2-week low on Tuesday as global demand outlook weakened and after media reports said ISRAEL will not attack IRAN’s nuclear and oil sites, easing supply disruption concerns. BRENT crude slipped 4.14%, to USD 74.25/barrel, while US WTI closed melting 4.4%, at USD 70.58/barrel. Both benchmark prices had reached their lowest levels since early October, after closing down around 2% on Monday. Brent and US WTI are down around USD 5 so far this week, almost erasing the cumulative gains made after traders feared Israel would strike Iranian oil facilities in retaliation for Tehran’s missile attack on October 1. Meanwhile both OPEC+ and the International Energy Agency (US IEA) this week cut their projections for global oil demand growth by 2024, with China being the biggest contributor to the decline.

• INDONESIA:

– TRADE BALANCE (Sept) recorded another surplus although this time narrowed to USD 3.26bn from USD 3.40bn in the previous month, as Export growth slowed to 6.44%, while Imports increased by 8.55%, despite lower than expected market forecasts and government plans to impose import duties. In the first nine months of 2024, the Trade Balance recorded a surplus of USD 27.72 billion, with Exports and Imports increasing by 0.32% and 3.86% respectively. On the other hand, FOREIGN DIRECT INVESTMENT into Indonesia increased by 18.55% yoy in the third quarter, reaching IDR 232.65 trillion (USD 14.94 billion), according to the Ministry of Investment. This marks an acceleration from the 16.6% annualized growth recorded in the second quarter, although the data excludes investments in the Financial and Oil & Gas sectors.

– Today, BANK INDONESIA’S BOARD OF GOVERNORS MEETING is expected to leave interest rates unchanged at 6.0% despite Inflation falling to its lowest level since 2021, in consideration of maintaining the stability of the RUPIAH exchange rate. Inflation fell to 1.84% and has been within BI’s target of 1.5% to 3.5% throughout the year, but the Rupiah has fallen more than 3% from its peak in September.

• JCI retreated regularly after encountering MA20 Resistance at 7636, finally closed at 7627, rallied 67.3 pts / +0.9%, this time supported by Foreign Net Buy of IDR 289.52 (RG market), a long time foreign buying action not seen lately. NHKSI RESEARCH sees that it still needs a lot of struggle from JCI to get back to its uptrend path, one of which is to break the MA20 Resistance above 7640. Market volatility is likely to remain high, especially as we approach the Cabinet formation & appointment of the new President, Prabowo, next week Oct 21.

Company News

• BELI: Duo Hartono Injects Blibli Through Private Placement IDR 2.25 Trillion
• FILM: IDR 794.75 Billion Loan, Look into the Allocation
• BBKP: Plans to Issue Notes Worth USD300 Million

Domestic & Global News
Prabowo Ask for 3 Deputy Finance Ministers, State Revenue Agency Canceled?
China to Pull USD 846 Billion in Debt to Boost Economy

Download full report HERE.