Today’s Outlook:
• The Dow Jones Industrial Average led weakness in Tuesday’s trading (16/01/24) by falling 0.6% as investors digested a number of earnings reports and a spike in US Treasury yields after Federal Reserve Governor Christopher Waller downplayed the need for an immediate rate cut. Waller expects the Fed to cut interest rates this year, but emphasized that the central bank does not need to cut rates quickly as the US economy still appears strong. The statement dashed optimism that interest rate cuts would begin in March, causing US Treasury yields to rise sharply. The yield on the 10-year US Treasury reached 4%, while the 2-year US bond rose 9 bps to 4.2%.
• MARKET SENTIMENT: Goldman Sachs gained 1% while Morgan Stanley tumbled 4.2% after each reported mixed 4th quarter performance. Rising prices of chipmaker stocks ensured the Technology sector stayed in positive territory, amid weakness in Tesla & Apple shares. NY Empire State Manufacturing Index (Jan) unexpectedly plunged to -43.7 (from forecast -5.0 and previous -14.5), indicating that around 200 manufacturing firms in New York state view general business conditions there to be deteriorating and expressed very high pessimism. As for today, US markets will monitor Retail Sales (Dec) and Industrial & Manufacturing Production (Dec) data.
• ASIAN MARKETS: CHINA’S series of key economic indicators for December (such as China house prices, investment, retail sales, industrial production, and unemployment rate), culminating in 4th Quarter and full year 2023 GDP, became the focus of attention for Asian market participants on Wednesday. MSCI’s Asia Pacific stock index outside Japan slumped 1.8% on Tuesday, the steepest decline in nearly six months. Asian stocks outside Japan are now down 5% this year; while emerging market stocks are having their worst start to the year since 2016. Chinese Premier Li Qiang in Davos on Tuesday said GDP growth was probably around 5.2% last year. He also said China is open for business, following the first quarterly deficit in Foreign Direct Investment since records began in 1998. Growth is expected to slow to 4.6% by 2024, with risks likely to grow on the side of an ongoing property crisis, weakening consumer and business confidence, high and rising local government debt, and sustained deflation.
• EUROPEAN MARKETS: After German CPI (Dec) came in as expected at 3.7% yoy (up from previous month’s 3.2%), market participants will monitor UK and Eurozone CPI (Dec), which is expected to be relatively flat at 3.8% yoy (from 3.9% previous month), while Eurozone CPI rose to 2.9% yoy from 2.4% in Nov. Yesterday, the UK also recorded a number of important indicators, especially on the labor front: wage growth slowed, amidst mounting jobless claims, but the Unemployment Rate (Nov) remained flat as in the previous month.
• INDONESIA: BI’s Board of Governors Meeting will announce its interest rate decision today. Bank Indonesia is expected to keep its key interest rate unchanged at 6.00%. With inflation within BI’s 2023 target range of 2.0% to 4.0% for 7 months and continuing to decline, the market expects the first rate cut to be realized in the third quarter.
• COMMODITIES: OIL prices ended lower in Tuesday’s volatile trading session as traders weighed the security situation in the Middle East that threatens supplies through the key Red Sea region; plus the strengthening Dollar amid reduced expectations of an interest rate cut in the near future. US crude oil futures (US WTI) fell 0.4% to USD 72.40/barrel and the Brent contract fell 0.3% to USD 77.95/ barrel. Tensions escalated in the Middle East after the United States and Britain pounded the Houthi group in Yemen, in retal iation for an attack by Iranian-backed militants on shipping in the Red Sea. In addition, Iran said on Tuesday that it had launched ballistic missiles at targets in Iraq and Syria to defend its sovereignty and to counter terrorism. This comes after Iran seized a tanker carrying Iraqi crude oil bound for Turkey on Thursday. More and more oil tankers are avoiding the Red Sea like Shell (as reported by the Wall Street Journal); they are opting to take the longer (and more expensive) route to Asia which indirectly tightens the market, as oil stocks on the water increased by 35 million barrels, according to Citi analysts. On the other hand, the prospect of sluggish crude oil demand remains in focus amid growing concerns that global economic conditions will worsen further in 2024. Germany’s economy is likely to grow by only 0.3% in 2024, the country’s BDI industry association said. This suggests that the Eurozone as a whole, a major consumer of energy, will barely register growth this year.
• JCI: The strengthening on Tuesday (16/01/24) that JCI attempted to do seemed fragile, where the session highs again bumped into MA10 & MA20 Resistance causing JCI to instead close below the nearest Resistance of 7250. NHKSI RESEARCH still advises investors/ traders to consider any rise in the index as an opportunity to sell at better prices, as the threat of a drop towards the bottom target of 7100/7070-7050 is still not neutralized.
Company News
• WIKA: Receives Approval to Hold Rights Issue
• PTBA: Sales Volume and Coal Production Increase
• RMBA: Officially Delisted from IDX Starting Tuesday (16/1
Domestic & Global News
• Indonesia’s Coal Production Still ‘Massive’ until 2035
• Iran Strike Sparks Dispute With Iraq as Fears of Regional Upheaval Grow
Download full report HERE.
