Today’s Outlook:
• US stocks closed relatively flat on Thursday trading (18/04/24), as investors sifted through the latest corporate earnings reports, while economic data and comments from Federal Reserve officials indicated that the US central bank is unlikely to cut interest rates in the near future. Economic data showed that the labor market remains resilient, as weekly jobless claims were unchanged from the previous week at 212,000 while the Philadelphia Fed Manufacturing Index (Apr.) rose to its highest level in two years, with a reading of 15.5 which was much higher than the estimate of 1.5 and 3.2 in the previous period. Existing Home Sales (Mar.) declined slightly at 4.19 million but not so far from expectations of 4.20 million which were already expecting a decline from 4.38 million housing units in the previous month. A solid labor market, the latest high inflation data, as well as comments from Fed officials including Chairman Jerome Powell, have caused market participants to push back expectations that the central bank will cut rates by at least 25 basis points (bps) at its June meeting to just 15.2%, according to CME’s FedWatch Tool; with July odds standing at 41.5%, down from 48.4% last week. Inevitably, this gloomy sentiment sent the S&P 500 eroding 0.24%, its fifth consecutive session of decline. The stock market seems to be struggling to sustain the five-month rally that started in November, largely due to expectations of a Fed rate cut in the first half of the year. The five-session decline marks the longest for the benchmark S&P index since October.
• Yesterday’s comments from Fed officials also reiterated the lack of urgency to cut interest rates, citing the US economy is still strong so they are quite comfortable being patient as it looks like US inflation is able to reach the Fed’s 2% target will be slower than expected. Even other officials marked the possibility of continuing to raise interest rates if the pace of inflation increases. Thus, US Treasury yields are still maintaining a bullish trend.
• ASIA & EUROPE MARKETS: JAPAN has released its National CPI figures this morning, where March Inflation was in-line with expectations of 2.7% yoy, cooling slightly from 2.8% in February. Further from continentalEurope today, market participants will be looking forward to: UK Retail Sales (Mar.), German PPI (Mar.), on the sidelines of IMF & Eurogroup meetings.
• JCI closed with a green, an increase of 36 pts/+0.5% to 7166.81, managed to break the consolidation of the past two days triggered by massive foreign net sell, totaling almost IDR 3 trillion. JCI seemed to stay in the Support area of 7100 which is the previous Low level on January 26th. The market driving sentiment is still around adjusting to the chaotic regional market as we are left with a long Eid holiday. JCI needs to ensure solid support before ending this consolidation session, hope is JCI does not have to move away from the psychological level of 7000 as the worst possibility. However, it is undeniable that the global situation is full of uncertainties, whether it is the fading prospect of US interest rate cut and the increasingly fierce Middle East conflict, plus the RUPIAH exchange rate which is still above IDR16100/USD, understandably has caused nervousness among market participants and made them choose to reduce portfolio positions. NHKSI RESEARCH expects volatility to remain high going forward, with immediate resistance: 7220/7280-7300. Therefore, we still advise investors/traders not to be too aggressive at this time, although there may be trading opportunities according to sector rotation as follows:
– Leading sector: Infrastructure, Energy, Health.
– Improving sector: Technology, Consumer – Cyclical.
Company News
• ANTM: Profit Slumped 19.45 Percent in 2023
• ITMG: IDR11.8 Billion in Exploration Funds
• ARCI: Spent IDR37 Billion in Exploration Costs
Domestic & Global News
• Government Officially Raises Sugar Price to IDR 17,500 per Kg
• Following US, EU Leaders Agree to Impose Sanctions on Iran
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