Today’s Outlook:
• The S&P 500 closed on Friday (16/02/2024), snapping a five-week winning streak as data this week showing inflation remains rein in investor bets on sooner rather later rate cuts. However, the S&P 500 managed to close above 5,000 for the fourth time this year thanks to robust corporate earnings and surging enthusiasm around artificial intelligence. The S&P 500 fell 0.5%, the tech-heavy Nasdaq Composite slipped 0.6%, and the blue-chip Dow Jones Industrial Average fell 0.4%, or 157 points. Most megacap stocks dropped, with Meta Platforms falling 2.2% and dragging the S&P 500 communication services index down 1.56%.
• Treasury yields rise as producer price index comes in hot to further dent rate-cut outlook Treasury yields jumped, with yields on the 2-year Treasury rising 8 basis points points to 4.652% as rate-cut bets were sullied after the U.S. producer price index by 0.3% in January from 0.1% in December, above economists expectations for a 0.1%. Meanwhile, the stronger PPI report was driven by a 0.5% rise in trade services.
• Meanwhile, two Fed officials expressed caution. Atlanta Fed President Raphael Bostic said he needed more evidence inflation pressures are easing, but is open to lowering rates at some point in the next few months. San Francisco Fed President Mary Daly said “there is more work to do” to ensure stable prices, despite remarkable progress.
• On the commodities front, oil prices settled higher on Friday as geopolitical tensions in the Middle East more than offset a forecast from the International Energy Agency for slowing demand. Brent crude futures settled up 61 cents, or 0.74% at $83.47 a barrel. U.S. West Texas Intermediate crude settled $1.16, or 1.49%, higher at $79.19 with the nearby March contract expiring on Tuesday. The April contract rose 87 cents to $78.46. For the week, Brent gained more than 1% and the U.S. benchmark rose about 3%. On Thursday, the IEA said global oil demand growth was losing momentum and trimmed its 2024 growth forecast. The agency expects global oil demand growth to decelerate to 1.22 million barrels per day (bpd) in 2024, about half of the growth seen last year, in part due to a sharp slowdown in Chinese consumption. It had previously forecast 2024 demand growth of 1.24 million bpd. The Organization of the Petroleum Exporting Countries (OPEC) expects oil use to keep rising for the next two decades.
• JCI officially stalled at the 7370 Resistance area, one step away from reaching the all-time-high of 7400 amidst the euphoria of the stock market as speculation of a one-round presidential election is increasingly confirmed. Judging by the increasingly heavy foreign buying flow, there is a possibility that this bullish wave can still be maintained, albeit limited. However, if JCI needs to pullback for a moment then NHKSI RESEARCH considers that the Support 7220-7200 still supports this uptrend, and therefore can use this momentum (if it occurs) as an opportunity to BUY ON WEAKNESS.
Company News
• TOBA: Signed PPA for Floating Solar Power Plant Project in Batam
• BMRI: Disbursed IDR 301.77 T in Infrastructure Loans
• DILD: Set Marketing Sales of IDR2 T in 2024
Domestic & Global News
• Inflationary Pressure Projected to Increase as Ramadan Begins
• Goldman Sachs Forecasts India’s Economy to Grow 6%
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