Today’s Outlook:
• US stock markets ended higher compared to global indexes in Wednesday’s trading, and crude oil continued its decline on weak demand projections. Mega-cap growth stocks faltered, limiting the Tech-laden NASDAQ’s gains; while economy-sensitive sectors helped propel the S&P 500 and DJIA to more substantial gains, with the Dow Jones Industrial Average recording its third-highest close in four days. The Dow Jones Industrial Average rallied 337.28 points, or 0.79%, back above the 43k level, the S&P 500 gained 0.47%, and the Nasdaq Composite appreciated 0.28%.
• MARKET SENTIMENT:
– FINANCIAL REPORT season has presented a series of upbeat earnings from major bank companies such as Morgan Stanley, sending its shares to record highs. Upbeat earnings also came from United Airlines pushing the commercial airline stock by 6.5%.
– ECONOMIC INDICATORS tonight will see the release of Retail Sales (Sept), weekly Initial Jobless Claims, Industrial & Manufacturing Production (Sept), as well as the Philadelphia Fed Manufacturing Index (Oct).
• EUROPEAN & ASIAN MARKETS: European stocks closed lower after disappointing results from ASML. Luxury goods maker LVMH also weighed on sentiment as investors were cautious ahead of the European Central Bank (ECB) policy decision on Thursday evening. UK reported their Sept Inflation rate came in at 1.7%, managing to come in lower than the 1.9% forecast and also from the previous period’s 2.2%. Weakness in goods & services prices was also seen at the producer level as Input & Output PPI fell even lower than expected. Another CPI figure today will come from EUROZONE where they expect Inflation (Sept) to come in at 1.8% yoy, also expecting it to be lower than the previous period’s 2.2%. This result plays an important role as Thursday night around 7.15pm GMT will be directly followed by EUROPEAN CENTRAL BANK’s decision on interest rate where consensus is preparing for a cut to 3.40% from ECB’s current benchmark rate position at 3.65%. In overall, the global MSCI stock index edged up 0.09%, the STOXX 600 index fell 0.19%, while the European FTSEurofirst 300 index slipped or 0.21%.
– On the other hand, emerging markets stocks lost 0.53% yesterday, to 1,143.64. As for this morning, JAPAN has released Trade Balance figures and more importantly the Sept Export – Import growth which turned out to fall deeper than expected especially the Export part.
• FIXED INCOME & CURRENCIES: US TREASURY bond yields fell as financial markets reinforced bets for a smaller interest rate cut from the Federal Reserve at the end of next month’s policy meeting. The benchmark 10-year US TREASURY YIELD fell 2.2 basis points to 4.014%, from 4.038% late Tuesday. The 30-year US Treasury yield fell 3 basis points to 4.2983% from 4.328% late Tuesday. The 2-year US Treasury yield, which usually moves in line with interest rate expectations, fell 2.1 basis points to 3.936%, from 3.956% late Tuesday.
– The US DOLLAR hit a 10-week high as traders ruled out a big interest rate cut at the next FOMC Meeting, and started to consider the possibility that Republican Donald Trump could win the presidential election on November 5. The DOLLAR INDEX (DXY), which measures the greenback’s strength against a basket of currencies including YEN and EURO, gained 0.28% to 103.55, with the Euro down 0.29% at USD 1.0858. Against the Japanese Yen, the USD strengthened 0.34% to 149.69.
• COMMODITIES: OIL prices are slightly lower, after dropping around 7% over the past 3 days. Concerns about a potentially supply-disrupting MIDDLE EAST CONFLICT have eased, after a calming statement from Israeli PM Benjamin Netanyahu that they will not attack Iran’s oil & nuclear infrastructure. While sluggish 2025 demand forecasts from the IEA & OPEC+ when they released their monthly report last Tuesday, disappointed oil traders/speculators. The oil market faces a dilemma between the planned increase in supply and weak demand, especially from China. US WTI crude oil contracted 0.27% to USD 70.39/barrel and BRENT fell to USD 74.22/ barrel, or -0.04%. GOLD prices extended their recent gains, driven by falling US bond yields. Gold spot price rose 0.49% to USD 2,674.10/ounce.
• INDONESIA: BANK INDONESIA (BI) maintained the benchmark interest rate at 6%, the deposit facility rate at 5.25%, and the lending facility rate at 6.75% at the BI RDG dated October 15-16, 2024. RUPIAH stabilized around 15505/USD. NHKSI RESEARCH assesses that this move by BI Governor Perry Warjiyo has shifted the focus from local issues, more to maintaining the stability of our Rupiah currency. This shift is significant as it contrasts with previous priorities under President Jokowi’s administration. This may be a preparation for BI’s increased role in safeguarding and strengthening the currency under the incoming new President Prabowo’s administration, signaling a more prominent goal to attract more FDI to Indonesia. JCI rallied 22pts / +0.29% to 7648.94 supported by Foreign Net Buy of IDR 209.65bn. JCI closing position above MA20 shows additional probability for further strengthening potential of JCI towards TARGET 7800-7900 aka trying to return to All-Time-High point, especially when the names of Prabowo’s cabinet Ministers have started to be sniffed out and market sees market friendly figures.
Company News
• UFOE: Damai Sejahtera (UFOE) Will Distribute Bonus Shares
• PALM: Skyrocketing 123 Percent, PALM Earns IDR 464.63 Billion in the Third Quarter of 2024
• RAJA: Rukun Raharja Potentially Earn IDR 777 Billion from Bakrie Group Oil and Gas Contracts
Domestic & Global News
Ceramic Industry Welcomes BMAD and SNI Rules
US Supreme Court Won’t Pause EPA Power Plant Emissions Rule
Download full report HERE.