Today’s Outlook:
• US stocks closed flat on Tuesday’s trading (17/09/24) despite a stronger-than-expected US Retail Sales report, which helped to ease fears of an economic recession ahead of the FOMC MEETING results which have been unveiled. The Dow Jones Industrial Average and S&P 500 closed flat on the day while the NASDAQ Composite rose 0.2%. It seems that market players are taking more of a WAIT & SEE attitude ahead of the Fed’s monetary policy announcement in the plan to cut the Fed Fund Rate (FFR) for the first time in 4.5 years, in September which is seasonally known as a difficult month in the stock market. Factset data shows that over the past 10 years, the benchmark index tends to fall 1.3% this month.
• MARKET SENTIMENT:
– US RETAIL SALES rose 0.1% mom in August, eliminating concerns of an expected 0.2% contraction, after rising a revised 1.1% the previous month. This figure helped reassure investors that the consumer remains relatively healthy and could prevent a sharp economic slowdown given the importance of the retail sector to the US economy.
– As such investors are pricing in a 68% chance of a 50 bps cut and a 32% chance of a 25 bps cut, according to the CME Fedwatch survey. Comments from Fed Chairman Jerome Powell will be closely monitored, looking for guidance on the extent to which the easing cycle will bring rates down in the coming months.
– US INDUSTRIAL & MANUFACTURING (Aug) also brought relief with a stronger than expected reading, bouncing back to positive growth from a contractionary situation in July. Other economic data awaited today: Building Permits & Housing Starts (Aug) figures.
• EUROPEAN & ASIAN MARKETS:
– EUROPE’S economic outlook for the next 6 months remains quite bleak as the GERMAN & EUROZONE ZEW ECONOMIC SENTIMENT figures came in well below expectations, implying market participants’ pessimism about the economic situation there.
– The UK will release Inflation figures (Aug) which on an annualized basis is unlikely to move lower than 2.2%, the same as the previous month. As for EUROZONE, this 2.2% yoy Inflation rate is what is expected to be achieved for Aug, easing from 2.6% in the previous month.
– While yesterday CHINA & SOUTH KOREA were still in public holiday mood, INDONESIA released its 52nd consecutive month of Trade Balance surplus figures, this time at USD 2.89bn, greater than the USD 1.96bn forecast and a significant improvement from July’s USD 500mn. The surplus was supported by a more aggressive growth in Exports than Imports (mostly from the non-oil and gas sector) although both posted aboveestimated performance.
– Talking about Trade Balance, on the contrary, JAPAN seems to be struggling to keep their Export – Import growth rate stable, when currently the August figures that came out plummeted below estimates. Core Machinery Orders (Jul) still rose on an annualized basis by 8.7% from a contraction of 1.7% last year, but on a monthly basis it grew by a negative 0.1%.
• COMMODITIES: CENTRAL OIL prices rose on Tuesday, extending the previous day’s gains caused by US production disruptions due to Tropical Storm Francine. The BRENT contract rose 1.5% to USD 73.85/barrel, while US WTI crude traded 1.6% higher at USD 70.12/barrel. Both contracts had closed higher on Monday after the arrival of the latest storm to affect the Gulf of Mexico crude oil production region, and as traders await the start of the monetary policy easing cycle by the US Federal Reserve. More than 12% of crude oil production and 16% of natural gas production in the US Gulf of Mexico remains offline, according to the US Bureau of Safety and Environmental Enforcement on Monday. From another commodity angle, GOLD prices started to retreat 0.5% from its record price throne of USD 2489.59/ounce, to USD 2569.43/ounce; as the Fed’s rate cut decision is approaching with even a greater percentage chance of 50bps. GOLDMAN SACHS remains optimistic on the long-term gold price projection, with a Target of USD 2700/ounce in early 2025. Furthermore, if interest rates fall then demand for gold-based ETFs could increase, especially demand from asset management in the West.
• JCI spawned a Doji candle at the Resistance area, indicating whether a trend reversal is imminent? Market participants are increasingly reminded by the phrase: “Buy on Rumor, Sell on News” facing the critical FED RATE CUT event that will soon materialize in the next 1 day. The position of most of the world’s stock indices are also at the top with valuations that are not cheap, so a temporary pullback is very reasonable to anticipate. NHKSI RESEARCH still advises once again not to forget to set your Trailing Stop, while letting your profit run and pay attention to sector rotation to scout for trading opportunities that are still running in the market.
Company News
• HRUM: Harum Energy’s EGM Approves Buyback of 849 Million Shares
• MTDL: Metrodata Prepares IDR 330M Capex in 2024, for This
• TOWR: Investor License, Sarana Menara (TOWR) Proposes Right Issue IDR 9 Trillion
Domestic & Global News
Milk Imports Surged 21.12% as of August 2024
Sluggish Industry, Goldman Sachs and Citigroup Lower China’s 2024 Economic Growth Projections
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