Today’s Outlook:

• The Dow closed above 40,000 for the first time on Friday (18/05/24), recording its fifth consecutive week of gains as rising interest rate cut hopes this year and mostly positive quarterly earnings from companies fueled bullish speculation on the stock market. The Dow Jones Industrial Average added 135 points, or 0.3% to close at a record high of 40,003.59, the S&P 500 rose 0.2%, while the NASDAQ Composite edged down 0.1%. Fed Governor Bowman said on Friday that he is willing to support rate hikes if disinflation stalls, or even reverses; and added that he is monitoring economic data to evaluate whether monetary policy is still tight enough. Bowman’s statement echoed the Fed’s speech last week that called for interest rates to remain higher for longer while considering incoming economic indicators. So far market participants have calculated a 49% chance that the Fed Funds Rate could be cut by 25bps at the scheduled FOMC Meeting in September; up from 48.6% in the previous week.
• COMMODITIES: OIL prices closed higher on Friday, ending the week with a win as signs of slowing US inflation boosted rate cut hopes; while CHINA unveiled more stimulus, lending support to projections of increased demand. BRENT futures rose 0.8% to USD 83.92/barrel and US WTI futures gained 0.9% to USD 79.57/barrel. OPEC is also expected to extend the production cut period after June, providing an outlook for tighter supply. Market analysts expect the 8 OPEC member countries that have made voluntary production cuts to extend them by at least 3 months, even before their regular meeting begins in early June. China said it will begin a massive $1 trillion bond issuance this week – Beijing’s first major fiscal stimulus measure as the country struggles to shore up a sluggish economic recovery, amid improvements in its manufacturing sector but still accompanied by sluggish Retail Sales & housing sector.
• ASIAN MARKETS: CHINA is expected to hold its benchmark lending rate steady on Monday, despite growing expectations of a cut in the benchmark mortgage rate as the government seeks to boost the housing sector.
• JCI posted nearly 1% gain on Friday trade, bringing it to 7317.24 in order to head towards its TARGET to around the All-Time-High figure of 7455; supported by strength in banking stocks, ASII, and Barito Group. Foreign Net Buy was also detected to come in at IDR 866.6bn (all market), diluting their YTD net short position to below IDR 1 trillion. NHKSI RESEARCH suggests that investors/traders need to assess whether the rise in Barito Group shares is still reasonable and anticipate an overall market pullback to 7280-7240 levels; hence our Best Advise is to set your Trailing Stop.

Company News

• SIDO: Distribute IDR540 Billion Dividend
• ASRI: 1Q24 Profit IDR42 Billion
• ADRO: Ready to Buyback IDR4 Trillion

Domestic & Global News
• PLN Opens Auction for Joint Development of 6 Geothermal Blocks
• China’s Economic Alarm, Consumption Suddenly Slows

Download full report HERE.