Today’s Outlook:

• Global equity markets plummeted while Gold prices surged on Thursday trading (20/02/25), exactly one month since US PRESIDENT DONALD TRUMP returned to the White House and 5 years since COVID-19 first shook world markets. Gold prices are approaching $3,000/ounce on the back of fears Trump will bring about a global trade war. Gold bullion hit its tenth record high this year, partly driven by safe haven demand amid tariff threats. On the other hand, the Dollar weakened against other major currencies, while the Yen strengthened on speculation of an interest rate hike by the Bank of Japan. On Wall Street, all three major indices closed lower, led by declines in the Financials, Consumer Goods, Communication Services, Industrials, and Materials sectors. In contrast, Energy, Real Estate, and Healthcare stocks managed to close in positive territory. Meanwhile, the benchmark S&P 500 index reached its second consecutive record closing high this week on Wednesday. The Dow Jones Industrial Average plunged 1.01% to 44,176.65, the S&P 500 fell 0.43% and the Nasdaq Composite lost 0.47%.

• MARKET SENTIMENT: Trump’s latest tariff warning on Wednesday is a 25% magnitude that will be focused on the pharmaceutical, semiconductor chip, automotive sectors as early as April 2. That, along with other threats such as reciprocal tariffs, has exacerbated fears of an escalation of the trade war and made investors nervous.

• – Market sentiment was exacerbated by a 6.5% plunge in shares of Walmart, the world’s largest retailer, after the company gave a gloomy sales and profit outlook, in which it anticipates inflation-weary consumers will tighten their purse strings after several quarters of solid growth. That’s in line with growing concerns about stagnation that were the result of the January FOMC MEETING minutes.

• ECONOMIC INDICATORS: Initial Jobless Claims showed a modest rise in weekly jobless claims to 219,000 from an upwardly adjusted 214,000 last week suggesting the US labor market remains well positioned. The Manufacturing Index in the Philadelphia region plunged to 18.1 in Feb, from a level of 44.3 in the previous month. Today will see the release of S&P Global’s preliminary PMI all sectors estimate (Feb), along with Existing Home Sales (Jan) numbers, as well as views on Inflation  expectations & consumer sentiment from the leading University of Michigan.

• EUROPEAN & ASIAN MARKETS: The pan-European STOXX 600 index slipped 0.2%. GERMAN DAX fell 0.5%, as their January producer-level deflation of 0.1% mom, missed expectations of a 0.6% rise. Europe’s largest economy is also bracing for snap elections at the weekend, following the collapse of Chancellor Olaf Scholz’s three-way coalition, with analysts anticipating a Conservative-led two-party coalition. MSCI’s worldwide stock gauge fell 0.30% to 884.15. Most major countries in EUROPE today also await preliminary PMI estimates for Feb, plus the UK awaits the release of their Retail Sales levels for Jan.

• – UKRAINE government bonds fell after Trump again shook the world’s calm on Wednesday by denouncing Ukrainian President Volodymyr Zelenskiy as a “dictator” and saying he needed to move quickly to secure peace or risk losing his country. Foreign ministers from the top G20 economies are meeting in South Africa. Top US officials have ignored the meeting and media reports on Thursday said that the US had opposed Russia’s call for aggression at Monday’s virtual G7 meeting. Analysts are beginning to see that the chances are dwindling that Trump will push for a peace deal that gives Ukraine long-term security, as he looks more pro-Russian.

• – As predicted, CHINA held their interest rates at current levels of 3.60% for the long term (5Y), and 3.10% for the short term. Other than JAPAN’S National Core CPI (Jan) and au Jibun Bank Services PMI (Feb), no major data will be released on Friday, it is unlikely that Asian markets will remain in Wait & See mode following Thursday’s avalanche which saw Japan’s Nikkei plunge 1.2% and Hong Kong’s Hang Seng index slump 1.6%; while China’s CSI300 leading stock index only edged down 0.3% due to China’s AI, DeepSeek.

• COMMODITIES: GOLD prices show no signs of slowing down. The price rose to a new record high of $2,956.69 per ounce. The precious metal is now up 12% by 2025 after rising 27% last year, its best performance in more than a decade. US gold futures closed 0.7% higher at $2,956.10.

• – In the OIL market, BRENT prices closed up 0.58% at $76.48 per barrel while US West Texas Intermediate (WTI) crude oil prices for March delivery rose 0.44% to $72.57, boosted by concerns over supply disruptions in Russia.

• CURRENCY & FIXED INCOME: In currencies, the YEN strengthened against the US DOLLAR to reach an 11-week peak of 149.40 per USD. The EURO was up 0.77% at $1.0502. The DOLLAR INDEX, which measures the strength of the US Dollar against a basket of currencies including the Yen and Euro, fell 0.77% to 106.35.

• – FED MEETING MINUTES for January (which were released on Wednesday) showed that central bank officials were still unsure about the impact of Trump’s policies on inflation, as they paused the easing cycle that had been in place since September. The minutes also revealed that they discussed slowing down or temporarily halting the quantitative tightening program, which diverted some of the flow of funds into Treasuries. That continued on Thursday where the tenor US TREASURY YIELD fell 3.2 basis points to 4.503%, helped by comments from Treasury Secretary Scott Bessent to Bloomberg who downplayed the chances of immediately increasing the size of long-term debt auctions.

• Considering the market sentiment, JCI seems to be testing MA10 Support at 6710 level after yesterday depreciated by 7pts / minus 0.1% to 6788 level, bouncing back from 6755.43 low; although foreign selling flow still hit at IDR 787.68 billion. JCI’s task is to break MA20 Resistance currently at 6905-6910 as soon as possible, in order to reach 7000 Target in the near future. However, at the end of this week, NHKSI RESEARCH prefers to maintain a Wait & See stance due to the absence of positive catalysts both regionally and domestically, with potentially polemical issues such as Danantara, amidst budget efficiency that is starting to get public backlash. FY 2024 earnings season is coloring here and there but so far not many issuers have released it. USD/IDR tested support at 16238 although it lifted back to 16304. If USD/IDR can strengthen below 16174 then this could be a booster for JCI to end its medium term downtrend.

Company News

• AALI: Profit and Revenue Grow, Check AALI’s 2024 Performance
• APLN: Agung Podomoro Boss Explains the Reason for Selling Malls to Hotels
• BNGA: CIMB Niaga Recorded IDR6.8T Profit Throughout 2024, Up 5.4 Percent

Domestic & Global News
For the 3 Million Houses Program, the Ministry of Finance Will Issue SBN Housing, BI is Ready to Buy
Preventing Trade War Escalation, EU Ready to Negotiate Tariffs with US

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