Today’s Outlook:
• The Dow Jones Industrial Average closed in the red again on Wednesday (17/01/24) for the third consecutive session, as US Treasury yields continued to rise, adding pressure to the Technology sector, after stronger-than-expected economic data clouded investors’ expectations of a Federal Reserve interest rate cut materializing in March. US Treasury yields continued to climb higher, with the yield on the 10-year bond rising above the psychological 4% level to record the highest position this year after US retail sales rose 0.6% in December, (beating expectations of 0.4%) on the back of motorcycle sales and online purchases. Signs of strong consumer spending power, which underpins two-thirds of economic growth, led economists to upgrade their 4th quarter GDP estimates on the basis that the US economy is still in strong shape; thereby reducing expectations of a March rate cut to around 50% (according to Investing.com’s Fed Rate Monitor Tool). The data also emphasized Federal Reserve Governor Christopher Waller’s statement the day before indicating that although a pivot is likely to occur this year, the central bank is not considering doing so in the short term, in view of the continued resilience of the US economy. Today market participants will again monitor US economic data such as (preliminary estimates) Building Permits & Housing Starts (Dec.), followed by Initial Jobless Claims which is expected to increase by 5000 to 207 thousand last week; plus the Philadelphia Fed Manufacturing Index (Jan.) which will determine whether the US economic outlook in the state of Philadelphia will show some optimism.
• ASIA & EUROPE MARKETS: China reported a mixed bag of economic data but the highlight was the 4th quarter GDP which came in at 5.2% yoy. Although clearly higher than the previous quarter at 4.9%, the market was somewhat disappointed at the lower-than-expected final economic growth result of 5.3%. For the full-year 2023, China’s GDP grew 5.2%, above expectations of 5.0% and much better than 3.0% in 2022 due to a number of stimulus measures launched to boost the economy last year. The good news is that Industrial Production (Dec.) rose to a 2-year high, albeit countered by sluggish Retail Sales in the same month. As a result, the Unemployment Rate (Dec.) was recorded to have risen 0.1% higher than in November, to 5.1% and this is the highest level in 4 months. Today it is Japan’s turn to read a number of economic indicators such as highlights on Industrial Production which is expected to contract 0.9% monthly growth in November. Meanwhile in continental Europe, Eurozone reported CPI (Dec.) came in at 2.9% yoy as expected, in-line with the monthly increase of 0.2%.
• COMMODITIES: global crude oil prices closed flat as US crude stockpiles unexpectedly increased last week, as reported by the American Petroleum Institute (API), at a time when concerns about sluggish global demand continued to rise following weak 2023 GDP results from China. US crude oil inventories rose by 939,000 barrels for the week ended January 12, compared with a decline of 5.2 million barrels reported by the API in the previous week. Economists had initially expected a decline of around 2.4 million barrels. Regarding the security situation in the Middle East, the latest update is that Iran launched an attack on Pakistan, after attacking Iraq-Syria which they claim destroyed the Mossad-Israel intelligence headquarters. Iran’s attack this time added to tensions in the region after the war in Gaza and attacks by the pro-Palestinian Houthi group in Yemen on commercial ships in the Red Sea international shipping lane. Pakistan’s Foreign Ministry considers this violation of Pakistan’s sovereignty totally unacceptable and may lead to serious consequences.
• JCI retreated 42 points seeking refuge to the 7200 support area, coupled with IDR933 billion foreign net sell. The Indonesian Rupiah weakened to IDR15,636/USD, almost matching its December high of IDR15,662. Bank Indonesia set BI7DRR to remain at 6.0% at its Board of Governors Meeting yesterday. NHKSI RESEARCH believes that the closing position of JCI confirms that the potential for further consolidation still exists, therefore we recommend investors to limit portfolio portion and temporarily try to reduce positions, until it is time to buyback, around the 7070-7050 area, up to the psychological level of 7000.
Company News
• MTDL: Partnering with FPT Information System Vietnam
• PGEO: Only Used 32.4% of IPO Proceeds
• KLAS: Budgeted IDR184.18 Billion CapEx
Domestic & Global News
• Luhut Asked for 40%-75% Entertainment Tax to be Postponed, This is the Reason
• China Wooing Business Leaders to Invest in the Country
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