Today’s Outlook:

• MSCI global stock indices rallied on Thursday (16/01/25), but Wall Street indices closed in negative territory; while US Treasury yields also depreciated after a mixed set of economic data and official Federal Reserve comments indicating the possibility of more interest rate cuts in the future. Major indices fell a day after recording their biggest daily percentage gains since the November 6 rally following the US presidential election. The Dow Jones Industrial Average edged down 0.16%, the S&P 500 lost 0.21%, and the Nasdaq Composite slipped 0.89. In contrast, the global MSCI index rose 1.31 points, or 0.15%, to 848.61. Market participants seem to be taking a Wait & See attitude. The stock market has been struggling following the US post-election rally, with the S&P 500 falling in four of the previous five weeks, although it is currently on a weekly bull run. A resilient economy, persistent inflation, and comments from Federal Reserve policymakers are still the main themes fueling concerns regarding the future of interest rates.

• MARKET SENTIMENT: After Wednesday’s US CPI data, it was the turn of the US Retail Sales report which was released yesterday and showed a below expected increase in December. In other data, the number of Americans filing new applications for unemployment benefits also increased more than expected last week but remained at levels consistent with a healthy labor market. Retail Sales (Dec) only grew 0.4% mom, lower than both the forecast and the previous month. Initial Jobless Claims came in at 217k, higher than expected and the previous week. One significant piece of data was the US Philadelphia Fed Manufacturing Index which sheds light on general business conditions in Philadelphia; the indicator skyrocketed to its highest point since May 2021.

– EARNINGS SEASON: Apple fell 4% to lead weakness in the Technology sector after research firm Canalys reported iPhone sales falling in 2024 after the company lost the top smartphone spot to competitors such as Vivi and Huawei. Apple’s smartphone sales to China in 2024 plunged 17% yoy. Meanwhile, reports from the Banking sector remained the main focus, with Morgan Stanley and Bank of America posting increased profits in the 4th quarter. These results follow their peers who reported the day before on Wednesday such as JPMorgan Chase, Goldman Sachs, Wells Fargo, and Citigroup who all reported strong performance in Q4/2024.

– Later tonight at around 2030 Western Indonesia Time will be awaited data surrounding the property sector from the US such as Building Permits & Housing Starts (Dec); plus Industrial Production (Dec).

• FIXED INCOME & CURRENCIES: US TREASURY YIELD fell as investors reacted to comments by Fed Governor Christopher Waller who said three or four rate cuts this year are still possible if US economic data weakens further. Waller also said that there is still a possibility of a rate cut in May. While waiting for President-elect Donald Trump’s inauguration on Monday, January 20, investors are closely monitoring statements from US Senate Finance Committee member Scott Bessent, Trump’s nominee to lead the Treasury Department. Bessent said extending Trump’s 2017 tax cuts is a top priority, that the Fed should remain independent, and that he is prepared to impose tougher sanctions on Russia’s oil sector. This follows his prepared remarks that the US should prioritize investment to grow the economy over “wasteful spending that drives inflation. Offsetting Trump’s uncertainty factor regarding his tariff policy, Bessent is considered a less controversial figure and so far most of his comments are in line with market expectations. This reinforces the view that this administration is pro-market and pro-business with Bessent being a pivotal appointment.

– THE US DOLLAR weakened as traders digested mixed economic data while assessing the prospects of a Fed rate cut this year and preparing for the incoming US administration. The DOLLAR INDEX, which measures the greenback’s strength against a basket of major currencies, fell 0.05% to 108.98. The EURO was up 0.09% at $1.0298 while against the Japanese YEN, the Dollar weakened 0.82% to 155.18. Comments from Governor Kazuo Ueda have prompted traders to estimate a more than 70% chance that the BANK OF JAPAN will raise interest rates next week.

– The benchmark 10-year US TREASURY YIELD fell 3.8 basis points to 4.615%, from 4.653% late Wednesday. The 30-year US Treasury yield fell 2.2 basis points to 4.8556%. The yield on the 2-year bond, which typically moves in line with Fed rate policy expectations, fell 2.5 basis points to 4.239%, from 4.264%.

• EUROPE & ASIA MARKETS: Europe’s STOXX 600 index closed up 0.98%, with luxury stocks boosted after the sales results of Richemont, owner of jewelry brand Cartier, beat analysts’ expectations. Economic indicators circulating in Europe: UK Industrial & Manufacturing Production for Nov fell lower than expected, no wonder Nov GDP was unable to meet expectations despite having emerged from recession compared to the previous month. Today it’s their turn to release the Dec Retail Sales figure which consensus expects a massive annual growth of 4.2% yoy compared to previous month which was only 0.5%.

– Talking about Dec CPI, GERMANY has reported their Inflation rate heating up as expected at 2.6% yoy. Today EUROZONE will follow suit with CPI (Dec) forecast to still experience growth at the same 2.4% yoy as the previous period although on a monthly basis prices are expected to be no longer in deflationary territory; likewise Core CPI at 2.7% yoy same as Nov.

– From the Asian continent, CHINA will be in the spotlight today as market participants await a series of data from them including: Q4 GDP which is expected to reach a level of 5.0% yoy and 1.6% qoq (should be higher than the previous quarter at 0.9%). Also keeping them company are Retail Sales, Industrial Production, and Unemployment Rate data, all of which are for Dec.

• COMMODITIES: OIL prices slumped as Yemen’s Houthi militia is expected to halt attacks on ships in the Red Sea, while energy traders digested a complicated ceasefire deal between Israel and the Hamas militant group. US WTI crude oil closed down 1.7% at $78.68 per barrel and BRENT closed at $81.29 per barrel, down 0.9%.

– US natural gas futures prices closed up about 4% at a two-year high due to cold weather forecasts for the Martin Luther King, Jr. holiday weekend, which could cut production with the Martin Luther King, Jr. Day weekend, which could cut production by freezing gas wells and pipelines even as demand for the heating fuel rises to record highs.

– GOLD prices rose to the highest level in more than a month on the back of declining US Treasury yields. Spot gold prices rose 0.65% to $2,713.26 per ounce. US gold futures rose 1.38% to $2,749.80 per ounce.

• JCI: the previous day’s sharp rise from the psychological support level of 7000 could be followed by a gain of 28pts / +0.4% to 7107.52, but unfortunately retreated from yesterday’s high of 7190.6 which is the Resistance Neckline of the (bullish reversal) Double Top pattern. This level is crucial because if it can be broken, it will end the Bottoming phase and potentially open the way to Target : NHKSI RESEARCH suggests more Wait & See attitude at the end of this week, while waiting for more substantial market catalysts next week during the inauguration of US President Donald Trump, and a number of his upcoming policies. Although the range of movement is limited today, it is expected that JCI will be able to keep the Support in the range of 7100 intact.

Company News

• SUNI: Won Procurement Tender from Pertamina IDR 129.8M
• PGAS: PGN Rating Increased to Baa2 Level, Why?
• BREN: Barito Renewables BREN Adds 41 MW Geothermal Power Capacity

Domestic & Global News
Prabowo Asked for Infrastructure Projects to be Transferred to Private Sector, AHY Says This
US says Gaza ceasefire to start as planned despite ‘loose end’

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