Today’s Outlook:
• MARKET SENTIMENT: Stocks tumbled on Friday as the postelection rally fizzled and investors fretted over the path of interest rates. The Dow Jones Industrial Average lost 305.87 points, or 0.70%, to end at 43,444.99. The S&P 500 slipped 1.32% and closed at 5,870.62, while the Nasdaq Composite fell 2.24% to 18,680.12. Declines in pharmaceutical stocks weighed on the 30-stock Dow and the S&P 500, with Amgen down about 4.2% and Moderna off by 7.3%. President-elect Donald Trump said on Thursday that he planned to nominate vaccine skeptic Robert F. Kennedy Jr. to lead the U.S. Department of Health and Human Services. He noted that the economy’s strong growth will permit policymakers to take their time as they decide the extent to which they reduce rates. Boston Fed President Susan Collins took the cautious sentiment further, telling The Wall Street Journal that a rate cut next month is not a certainty. October retail sales data on Friday showed a 0.4% increase, slightly better than the 0.3% forecast from economists polled by Dow Jones. That finding follows an October consumer inflation report that was in line with economists’ projections. The major averages had been coasting on a postelection rally since Trump’s victory at the polls — the three indexes touched fresh highs on Monday — but the upward momentum has been slowing. The S&P 500 posted a weekly loss of 2.1%, while the Nasdaq Composite slid about 3.2%. The 30-stock Dow fell 1.2% during the period.
• ECONOMIC INDICATORS: Investors are not anticipating any significant data to be released on Monday.
• ASIA & EUROPEAN MARKETS: Asia markets were mixed Friday as Wall Street fell after U.S. Federal Reserve Chair Jerome Powell indicated the central bank was in no rush to cut rates, with investors also assessing China and Japan economic data. Speaking in Dallas, Powell pointed out that strong U.S. economic growth will allow policymakers to take their time in deciding how far and how fast they should lower interest rates. In Asia, investors assessed key economic data from China on Friday, which included October numbers for retail sales, industrial production and urban unemployment. China’s retail sales rose more than expected in October, while industrial production and investment data missed forecasts. The unemployment rate in cities fell to 5% in October, down from 5.1% in September. European markets closed lower Friday after a choppy session, as investors assessed fresh economic data and the future path for interest rate cuts following hawkish comments from U.S. Federal Reserve Chair Jerome Powell. The pan-European Stoxx 600 provisionally closed 0.76% lower, recording its fourth consecutive weekly decline according to LSEG data. Media stocks slumped 3% while mining stocks gained 1.3%. On Friday, investors digested fresh U.K. GDP data for insight into the state of the Britisheconomy — the first reading since the Labour government’s October budget announcement.
– On Monday, there is no significant data realease or event anticipated.
– Crude oil futures on Friday posted a loss for the week, as a looming supply glut and a strong dollar depresses the market. U.S. crude oil lost nearly 5% this week, while Brent has declined nearly 4%. Brent January contract: $71.04 per barrel, down $1.52, or 2.09%. Year to date, the global benchmark has lost nearly nearly 8%. The International Energy Agency has forecast a surplus of more than 1 million barrels per day in 2025 on robust production in the U.S. OPEC revised down its demand forecast for the fourth consecutive month as demand in China remains soft. A strong dollar also hangs over the market, as the greenback has surged in the wake of President-elect Donald Trump’s election victory.
• FIXED INCOME & CURRENCY: The 10-year Treasury yield was marginally higher on Friday, capping an eventful week of inflation data and comments from Federal Reserve Chair Jerome Powell suggesting the central bank may not be as aggressive on its rate-cutting campaign going forward. The yield on the 10- year Treasury note was higher by about two basis points at 4.439%. The 2-year Treasury note yield last traded at about 4.307%, a rise of roughly 1 basis point. Last week, the yields on the 10-year and 2-year ended at 4.31% and roughly 4.25%, respectively. One basis point equals 0.01%. Bond yields and prices have an inverse relationship. Fed Chair Powell spoke in Dallas on Thursday, noting that strong U.S. economic growth means the central bank won’t need to rush to cut interest rates. Policymakers dialed back rates by a quarter point last week. Fed funds futures trading now implies a roughly 62% probability that the Fed will lower interest rates by a quarter point at its December meeting, according to the CME FedWatch Tool. They also reflect a nearly 38% likelihood of central bank policymakers keeping rates steady. The Fed’s current target rate range sits at 4.5%-4.75%.
– The U.S. dollar was set for its biggest weekly gain in over a month on Friday, as markets reassessed expectations of future interest rate cuts and with the view that President-elect Donald Trump’s policies could be inflationary. The dollar has benefited from market expectation that Trump administration policies, including tariffs and tax cuts, could stoke inflation, leaving the Federal Reserve less room to cut interest rates. Fed Chairman Jerome Powell said on Thursday the U.S. central bank did not need to rush to lower interest rates, prompting traders to axe their more aggressive bets on a rate cut next month and beyond. The greenback was set to notch a weekly gain against the Japanese yen after it traded above 156 yen this week for the first time since July. It was last down 1.4% to 154.145 per dollar.
– The euro was headed for the second straight week of losses after slumping to its lowest level since October 2023. It was last up at $1.054025.
– Sterling was on track for its steepest weekly fall since January 2023, at roughly 2.4%. It was last down 0.38% at $1.2620. The pound showed little reaction to data showing Britain’s economy contracted unexpectedly in September and growth slowed to a crawl over the third quarter.
• INDONESIA: There is no significant catalysts for Indonesia in terms of data publication. However, much of the pent-up sentiment on Monday will be based on Prabowo and his cohorts’ APEC summit meeting progress. Aside from that, BI’s Decision which is expected to be dovish cut as much as 25 bps for Nov2024 from consensus will also hinder trading to a wait-and-see mentality.
Company News
• TOBA: Pefindo Maintains TOBA Negative Outlook
• AMAN: To Entice Investors, AMAN Optimistic Sidoarjo Halal SEZ to Attract IDR 97.8 Trillion
• ISAT: Reason Indosat Wants to Build AI Center in Jayapura
Domestic & Global News
In front of UN Secretary General, Prabowo Hopes Indonesia’s Energy Transition Can Reach 100% in 10 Years
Biden and Xi Jinping Agree AI Should Not Control Nuclear Weapons
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