Today’s Outlook:
• The DJIA surged 243pts / +0.6% to a new closing high of 41,198 on Wednesday (17/7/24), led by the Finance & Energy sector due to a wave of sector rotation from the Technology sector after a 6% plunge in Nvidia shares sent the NASDAQ down 2.8% and the S&P500 down 1.4%; due to geopolitical concerns that will affect the chip trade between countries. The US administration seems to be considering expanding the ban on companies exporting chip-making equipment to China, Bloomberg Businessweek reported on Tuesday; dragging down the Philadelphia SE Semiconductor index by 6.8%, which is the biggest daily decline since March 2020. In addition to Biden, Donald Trump also raised geopolitical tensions by stating that Taiwan should pay the US for supplying defense equipment because Taiwan “gives the US nothing,” causing Taiwan Semiconductor Manufacturing, Taiwan’s largest stock and the world’s largest chipmaker, to fall nearly 8%. While Q2 earnings season continues to color the stock market turmoil, Fed officials signaled an interest rate cut is getting closer as Federal Reserve Governor Christopher Waller stated on Wednesday, as recent data showed more moderate economic growth and easing inflationary pressures.
• ECONOMIC INDICATORS: US Housing Starts & Building Permits data rose unexpectedly; while Industrial Production in June also increased double above expectations. The Federal Reserve also released the Beige Book which describes US economic activity running at a moderate pace from late May to early July, amid indications that the labor market is starting to weaken, in line with soft landing symptoms. Currently, financial markets are almost 100% price-in the probability that the Fed will hold a rate cut in Sept, as quoted from CME Fed Watch.
• ASIA & EUROPE MARKETS: Most Asian stocks plunged into negative territory with concentration around the TAIWAN & CHINA markets after the US government’s stance & Donald Trump’s comments regarding Taiwan. Taiwan & China’s relationship is a sensitive topic, as China continues to call for reunification with Taiwan; while the US is Taiwan’s largest arms supplier even though they have no official diplomatic agreement. As is well known, Donald Trump was famous for his trade war moves against China during his presidency in 2010. News from home: INDONESIA held its interest rate at 6.25% at BI’s RDG yesterday. Speaking of interest rates, it’s the ECB’s turn today to make a rate decision which the public expects will also be held at 4.25%. EUROZONE reported CPI (June) at the estimated 2.5% yoy, slightly down from 2.6% in May; while UK CPI (June) still could not be lower than 2.0% yoy which is the central bank’s target.
• COMMODITIES: GOLD prices rose to record highs in Asian trading on Wednesday, extending recent strong gains amid growing optimism that the Federal Reserve will cut interest rates in September. Spot gold prices rose 0.2% to a record high of USD 2,478.65/ounce, while gold futures expiring in August hit a record high of USD 2,483.65/ounce. The DOLLAR INDEX slumped to month lows amid prospects of interest rate cuts, further benefiting precious metals prices. Other precious metals also rose following the weakening dollar, with PLATINUM futures up 0.1%, while SILVER futures 0.3%.
• OIL prices rose around 2% on Wednesday thanks to a larger-than-expected drop in US crude weekly stocks, plus a weaker US DOLLAR, while signs of lower economic growth in China remained a dark cloud looming. BRENT futures rose 1.6%, to USD 85.08/barrel, while US WTI advanced 2.6%, to USD 82.85. The weakening of the US Dollar due to the increasingly feasible prospect of a Fed rate cut, is expected to increase interest in buying crude oil from non-US
countries.
• JCI seemed to make an attempt to break back above MA10 Resistance, right at yesterday’s High point of 7265; which unfortunately was forced to close back down to around the previous day’s Closing point of 7224. Thus, NHKSI RESEARCH still holds the same view as yesterday’s prediction that the consolidation process will continue at least to the next Support of 7125-7090 which is the cushion of MA20 & MA50.
Company News
• DMAS: Puradelta Lestari (DMAS) Achieves Pre-Sales of IDR 1.1 in First Semester
• TOTL: Shimizu Holds Tender Offer for TOTL Shares IDR 580 per Share, Here are the Details
• DRMA: Adding Ownership, the Commissioner Now Controls 1,363 Percent of DRMA Shares
Domestic & Global News
Ceramic Tile Imports Will be Subject to Anti-dumping Duties, How Much?
IMF Forecasts China and India to Control Half of Global Economic Growth by 2024
Download full report HERE.
