Today’s Outlook:
• Global stock indexes fell on Wednesday (01/05/24) while the Dollar weakened against a number of other currencies after the Federal Reserve kept its interest rates unchanged at 5.25%-5.50% and indicated it was still leaning towards a rate cut following a string of US economic data; although the Fed also raised warning flags on recent disappointing Inflation readings. On Wall Street, the S&P 500 closed marginally lower by 0.07% and the DJIA led the gainers by gaining 172.78 points/+0.46% while the NASDAQ closed flat in volatile trading following the FOMC Meeting announcement; each of the major indices closed April with the first monthly decline since October.
• ECONOMIC INDICATORS: Earlier, data from ADP Employment Change showed employment in the US private sector increased more than estimated in April, while data for the previous month was revised higher. However, a separate report from the Bureau of Labor Statistics on JOLTs (Job Openings and Labor Turnover Survey) showed job openings in the US fell to the lowest level in three years in March, while the number of people quitting their jobs declined, which is an indication of a reduced labor pool that could potentially help the Fed in its fight against Inflation. Other data from the Institute for Supply Management showed continued sluggishness in the US manufacturing sector, which contracted in April amid falling orders after having expanded the previous month. All of these data come ahead of Friday’s main government employment report (Nonfarm Payrolls). Markets have reduced expectations regarding the timing and number of rate cuts by the central bank this year, as Inflation proves to be stable and the labor market remains on a strong footing. Bank of America maintains their view that the first rate cut will occur in December on the premise that Inflation will still be high and difficult to fall. They also considered the possibility of interest rates rising still quite high, although Powell had expressed that there was little probability of that happening. MSCI’s worldwide stock index fell 0.94 points, or 0.12%, to 755.67. Investors were also treated to a flood of Q1 earnings reports from US companies, with Amazon.com up around 3% after its quarterly results, which served to prop up the Dow Jones as a whole.
• The DOLLAR index was down 0.21% at 106.10, following the Fed’s statement, having earlier reached 106.49, the highest since April 16; with the Euro gaining 0.22% at USD 1.0688. The yield on the benchmark US 10-year note fell 5.2 basis points to 4.632%, from 4.684% at the end of Tuesday; while the yield on the 2-year note, which typically moves with interest rate expectations, fell 4.8 basis points to 4.9977%. European bond markets were closed for the May 1 holiday, as were most stock markets in Europe and in China, Hong Kong, and most of Asia. Of the traded stock markets, the UK FTSE ended down 0.28%, and Japan’s Nikkei closed down 0.34%.
• COMMODITIES: OIL prices fell for a third day on rising hopes for a ceasefire agreement in the Middle East and continued declines after the surprise report on US oil stockpiles by the EIA, which jumped by 7.3 million barrels in the week ended April 26, well above Reuters polled analysts’ forecasts where they predicted a 1.1 million barrel decline. Each of the benchmark prices fell more than 3% to a 7-week low. US WTI crude oil slid 3.54% to USD 79.03/barrel and BRENT fell to USD 83.49/barrel, dropping 3.29%.
• Reversing, foreign funds began to re-enter the domestic stock market on the last trade of April, on Tuesday (30/4/2024) by recording a net buy of IDR730 billion, making the JCI further appreciated to the level of 7234.2. Throughout April, foreigners recorded a net sell of IDR18.3 trillion (all markets) on the Indonesia Stock Exchange (IDX) which sent the JCI down 1.58%; while YTD foreigners still recorded a net buy of IDR7.95 trillion. Today INDONESIA investors/traders will be watching the Nikkei Manufacturing PMI (Apr.) data which has been released at 52.9, weaker than the previous month’s 54.2. Later in the day, it is April Inflation data that is eagerly awaited, where it is expected that goods & services prices will increase by 3.06% yoy, slightly heating up from 3.05% in March; but mainly Core Inflation will be able to stabilize around 1.76% yoy, from 1.77% in the previous position. NHKSI RESEARCH expects bullish situation to start appearing more firmly in the market with JCI break out above MA10 & MA20 but yesterday’s high point exactly hit MA50 resistance, making 7265 level as the closest resistance now. Average Up suggestion is only wise to do if JCI is able to break through this level, on the other hand, Hold attitude should be maintained if JCI chooses to break below Support 7200 (let alone 7150).
Company News
• BBNI: Record Profit Growth in 1Q24
• UNTR: Profit and Revenue in 1Q24 Plummeted
• PGAS: 1Q24 Profit Recorded USD121 Million
Domestic & Global News
• April 2024 Inflation is Projected to Continue Rising, Driven by Food Prices
• IMF Reminds Asian Central Banks: Don’t Rely on the Fed!
Download full report HERE.
