Today’s Outlook:
• The S&P500 and NASDAQ closed slightly lower on Tuesday (16/04/24), while the DJIA finally closed only 0.2% higher giving up most of its intraday gains as investors digested STATEMENT FROM FEDERAL RESERVE CHAIRMAN JEROME POWELL which signaled that high interest rates are still needed for a longer time, addressing March US Inflation data of 3.5% yoy which strengthened above expectations. Powell said that recent economic data clearly does not provide
enough confidence for the central bank to start cutting interest rates, but also added that the current policy of higher for longer interest rates is quite appropriate to deal with future inflation risks. The UBS market strategist even predicted that the Fed may need to raise rates to 6.5% next year if US economic growth and sticky Inflation remain unstoppable. On the other hand, Powell also said that the potential to ease monetary policy still exists if there is evidence of significant weakness in the labor sector. No doubt his statement above hit back hopes of an immediate rate cut materializing this year, and instead pushed US Treasury yields higher, where the yield on 2-year bonds rose above 5% for the first time since November. Another sentiment that colored the market: FIRST QUARTER FINANCIAL REPORTS began to be released, where some big names such as United Health Group (one of the main components of the DJIA), and Morgan Stanley posted brilliant performance, while Bank of America, Johnson & Johnson and Tesla were the market’s ballast due to their earnings issues below expectations, as well as plans to reduce 10% of global office staff.
• COMMODITIES: OIL prices closed lower on Tuesday due to negative sentiment from global economic developments, limiting upside potential stemming from geopolitical tensions in the Middle East region, as the world now monitors Israel’s response to last weekend’s Iranian attack. BRENT crude futures for June delivery closed 8 cents lower, or 0.1% at USD90.02/barrel, while US WTI for May delivery fell 5 cents, or 0.1%, to end at USD85.36/barrel. The tendency for tight monetary policy to remain in place is considered by market participants to hit the ability of the global economy and energy purchasing power. US Treasury Secretary Janet Yellen revealed that the US intends to impose new economic sanctions on Iran regarding their attack on Israel, and these sanctions are expected to stem Iran’s oil production/export capacity. It is known that Iran produces more than 3 million barrels per day as one of the world’s major oil producers, joining OPEC+. Meanwhile, US crude oil inventories rose by 4.1 million barrels last week, according to data from the American Petroleum Institute (API); a higher-than-expected increase of only 1.4 million barrels.
• ASIA & EUROPE MARKETS: CHINA reported their first quarter GDP grew at 5.3% yoy, beating estimates of 4.8% and also from the previous quarter’s 5.2%; although it was countered by below-expected March Retail Sales & Industrial Production growth. Still no glimmer of hope in their property crisis, house prices slumped further in March, China’s cement output also slumped 22% in March (the largest monthly decline of all time). Economists think Chinese policymakers need to launch more support/stimulus. These macroeconomic data were unable to prevent the Chinese yuan and stock market from collapsing.
• JCI closed down 122.06 points or 1.68% to 7,164.81 on the first trade after the long Eid holiday. The LQ45 index also fell by 28.38 points or 2.95% to 935.34; following the collapse of most major markets in Asia which experienced a decline of around 2% and the position of the Rupiah exchange rate perched at Rp16,176/USD, weakening 1.91% from the previous trade at Rp15,873. Foreign investors recorded a jumbo net sell of IDR2.48 trillion across all markets, the largest in PT Bank Central Asia Tbk (BBCA) IDR1.01 trillion, PT Bank Rakyat Indonesia Tbk (BBRI) IDR648.0 billion, PT Telkom Indonesia Tbk (TLKM) IDR558.35 billion and PT Astra International Tbk (ASII) IDR205.79 billion. Indonesia’s March Consumer Confidence figure which grew to 123.8 from 123.1 was unable to support the market. Retail Sales data will be awaited today. Technically, JCI’s decline was somewhat restrained by the sideways trend support around 7130, although the low point had overshoot to 7066 (support boundary=7050-7000 round number as psychological support). NHKSI RESEARCH still sees limited strengthening potential at least towards the 7240 GAP cap as a short term target, but advises investors or traders not to be too aggressive in entering the market given the high uncertainty factor still looming.
Company News
• INCO: Spent USD1.67 Million in Exploration Costs
• CNMA: Budgeted IDR775M CapEx in 2024
• TKIM: Earned USD172.01 million Net Profit
Domestic & Global News
• Wheat Flour Stocks Are Said to be Running Low Due to the Import Restrictions of Permendag 36/2023
• China’s Economy Grows 5.3% in 1Q/2024, Driven by Industry
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