Today’s Outlook:
• Wall Street extended its rally on Tuesday (19/12/23), with the Energy and Communication Services sectors posting the largest percentage gains, as positive sentiment stemmed from the Federal Reserve’s dovish statement last week indicating a potential pivot next year; as investors monitored the PCE price index, a benchmark figure crucial to the Inflation trend. The S&P500 is one step away from equaling the January 2022 high, and if that level is reached it will confirm the index has been in a bull market since bottoming in October 2022. The bluechips-laden DJIA printed another new all-time-high; while small caps also enjoyed strong gains in December, as evidenced by the Russell 2000 index which has surged 11.7% so far this month. On the economic data front, the Commerce Department report showed that new home sales increased a sharp 18% in November, the highest in over 1.5 years. The Commerce Department is also scheduled to release the final estimate of Q3 GDP on Thursday, followed by the Personal Consumption Expenditures index on Friday, which will shed light on Salary growth, Spending, and Inflation trends. But before that, later tonight market participants will focus on the CB Consumer Confidence (Dec.) data which is expected to strengthen as well as Existing Home Sales (Nov.) which is predicted to be little changed from October; last but not least: US Crude Oil Inventories which may show another surprise similar to the API Weekly Crude Oil Stock which was 939 thousand barrels higher than the estimated 2.2 million barrels lower in the last week.
• The Energy and Raw Materials sectors led the market gains, underpinned by an almost 2% rise in Oil prices due to increased ship attacks by Houthi militants (Iran-Yemen) in the Red Sea. The US Navy has announced plans to deploy their troops to protect shipping on the crucial trade route; similar moves are likely to be followed by UK, France, Italy, Norway & Spain. Notably, around 12% of global shipping traffic crosses the Suez Canal, en route from the Mediterranean region to key Asian markets. The attack has led a number of companies to announce at the end of last week that they will avoid the Red Sea route, with even Oil giant BP stating that it will delay a number of shipments through the Red Sea route given the precarious security situation in the region. Meanwhile, the Raw Materials (natural resources) sector also rallied following the rise in commodity prices including Copper on expectations that future interest rate cuts will boost economic growth and demand for the metal.
• ASIA MARKETS: Bank of Japan announced unchanged interest rate decision in negative territory. BOJ maintains its super loose policy where interest rates are currently at -0.1%. Japan’s Export – Import growth for the month of November is still struggling in negative territory causing the Trade Balance deficit to swell further from the previous month. Next up is China’s central bank which will follow the interest rate decision soon, where the market expects the short term (1 year) and long term (5 years) rates to remain where they are, currently: 3.45% and 4.20%.
• EUROPEAN MARKETS: Eurozone reported CPI (Nov.) which successfully slid to 2.4% yoy, lower than 2.9% in the previous month. Core CPI (Nov.) also got closer to the ECB Target of 2% when it managed to cool to 3.6% yoy, as expected lower than 4.2% in October position. Later in the afternoon, the UK will report Inflation (Nov.) which also managed to ease to 4.3% yoy, from 4.6% in the previous month. Germany will complete the Inflation data set by announcing producer-level Inflation (PPI) for November as well as the GfK German Consumer Climate (Jan.).
• JCI has corrected its position above MA10, thereby securing this Uptrend that has been climbing since bottoming in early November. NHKSI RESEARCH believes that JCI will also still take advantage of the bullish sentiment that is currently dominating the financial market (stock market in particular), thanks to the pivot view next year. The Santa Claus Rally is expected to persist and get stronger through the critical Resistance of 7200 on the way to the (NEW) END OF YEAR TARGET trying to reach back the all-time-high range of 7355-7377. Investors/traders are advised to keep an eye on the sector rotation which benefits from the interest rate cut outlook which theoretically will boost the global economy going forward. Foreign Net Buy is slowly picking up, where the current YTD position has increased to IDR 4.3 trillion thanks to higher appetite for risky assets post the Fed’s dovish decision.
Company News
• CUAN: IDX Freezes CUAN Shares
• DEWA: Mining Services Business Increases
• MDKA: Holds IDR229.5 Billion Affiliate Transaction
Domestic & Global News
• Money in Circulation During the 2024 Election is Forecasted to Increase by More than IDR 200 Trillion
• Red Sea Tensions Escalate, How Are Shipments Faring?
Download full report HERE.
