Today’s Outlook:
• Most global stock markets moved in the green, along with the US Dollar in Tuesday’s trading (16.07.24) after stronger than expected US RETAIL SALES data was seen as support for the Federal Reserve’s interest rate cut prospects in order to achieve a soft landing. Data showed monthly retail sales were unchanged in June from May’s figure of 0.3% which was revised upwards. This was better than the expected 0.3% contraction, suggesting that consumers still have healthy spending power, although it may limit the number of times the Fed will cut rates. The Dow Jones Industrial Average posted its best daily gain for a year, soaring 742points / +1.9% to close at a record 40,954. The S&P500 also climbed 0.6% to a new record of 5667, while the NASDAQ gained 0.2%. Echoing Jerome Powell’s dovish comments last Monday, Fed Governor Adriana Kugler said that the latest data showed Inflation returning to the central bank’s target of 2%. Investors are pricing in an 89% chance of a rate cut of at least 25 basis points (bps) at the US central bank’s September meeting, according to the CME FedWatch Tool. Later tonight markets will watch for other important economic data from the US: around the property sector (Building Permits & Housing Starts for June), as well as Industrial & Manufacturing Production (June).
• EARNINGS SEASON: The performance of Wall Street’s big banks again dominated earnings, with Bank of America jumping 5% and Morgan Stanley gaining 1% after reporting better-than-expected numbers.
• US POLITICAL MAP: The electability of US presidential candidate DONALD TRUMP has risen sharply in the wake of last weekend’s shooting attacks. The Republican candidate has signaled support for traditional policies that are considered more friendly to domestic business entities, such as implementing looser policies, imposing tariffs on imported goods, and cutting taxes. Trump’s vice-presidential running mate, Ohio Senator J.D. Vance, is also known to be quite “fierce” towards China.
• CURRENCY: DOLLAR INDEX remains flat; against the Japanese Yen, the Dollar gained 0.22% to 158.37. Investors are still keeping a close eye on the Yen after allegations the Bank of Japan may have intervened for a second time on July 12 amounting to 2.14 trillion Yen (USD 13.50 billion) to support the currency, following around USD 22.43 billion apparently spent on intervention the previous day.
• ASIA & EUROPE MARKETS: Different results on ZEW Economic Sentiment were shown by GERMANY & EUROZONE, where economic sentiment seemed more optimistic in Germany than Eurozone; matching with Eurozone Trade Balance surplus data which weakened in May most likely not supported by sufficient Export – Import growth. Further today market participants will focus on the UK Inflation data (June) which could possibly be even lower than 2.0% (which is already the central bank’s Target); while the Eurozone is also hoping that June CPI will be able to ease at least to 2.5% yoy, compared to 2.6% in May.
• INDONESIA: all eyes will be on Bank Indonesia for its interest rate decision, which is expected to be held at 6.25%, in an effort to stabilize the Rupiah while waiting for concrete steps from the Fed’s rate cut. NHKSI RESEARCH needs to give a more serious warning on JCI that has broken its first Support, MA10 (below 7260 level which is now turning into the nearest Resistance). More consolidation has a chance to continue towards 7100 before finding a base to continue the upward swing again.
• COMMODITIES: OIL prices fell more than 1% on Tuesday, the third consecutive day of declines, on fears of CHINA’s economic slowdown hampering demand, although this decline was stemmed by the prospect of a Fed rate cut in September, as well as the disappearance of 4.4 million barrels from US crude inventories last week (much larger than the 33k barrel Reuters poll estimate). BRENT futures closed down 1.3%, at USD 83.73/barrel, while US WTI fell or 1.4%, to USD 80.76. As noted, China’s economic growth was last released at 4.7% in the 2nd quarter of this year, the slowest pace since Q1 of 2023, and missed estimates of 5.1% according to a Reuters poll. China’s GDP is on a weaker trend than the expansion in the previous quarter of 5.3%, due to the prolonged sluggishness of the property sector and insecurity in employment. Meanwhile, the global economy is expected to experience moderate growth in the next 2 years amid declining activity in the US, economic decline in Europe, and strengthening consumption and exports in China; although there are many risks on that path, according to the July edition of the IMF report released last Tuesday.
Company News
• EXCL: XL Axiata Expands FMC Coverage in Sulawesi
• AGRO: Buyback, Bank Raya Prepares IDR 20 Billion Expenditure
• MEDC: Medco Energi (MEDC) Releases 71.4 Million Treasury Shares
Domestic & Global News
Director General of Customs Highlights the Phenomenon of Cheap Cigarettes, CHT Tariffs Will Rise?
China’s Manufacturing Grows Three Quarters in a Row as Economy Slows Down
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