Today’s Outlook:
• Global stocks surged higher and the S&P500 closed above the 5200 level for the first time on Wednesday (20/03/24), after the Federal Reserve decided to leave interest rates unchanged at 5.25% – 5.50% and indicated that there would be 3x rate cuts this year, easing the anxiety of market participants that the US Inflation figures that tend to heat up lately will make the Fed keep interest rates high. The NASDAQ immediately led the gains by jumping 1.3%, while the DJIA appreciated 1% or 401 points; both indexes closed at record highs. The Fed also said that they project the Fed Funds Rate to decline to 4.6% next year, thus the forecast of 3x rate cuts remains the same as the initial projection in December. For 2025 and 2026, the Fed sees fewer rate cuts, to 3.9% next year and 3.1% in 2026, higher than the initial forecasts of 3.6% and 2.9% respectively. Other US economic projections include the Core Personal Consumption Expenditures (PCE) price index, which is the Fed’s favorite Inflation benchmark, will be at 2.6% in 2024, up from the initial estimate of 2.4%. As for 2025 and 2026, the inflation is estimated to fall further to 2.2% and 2%, unchanged from the initial projection. Interestingly, the Fed sees the possibility of economic growth this year strengthening to 2.1%, up considerably from 1.4% previously estimated; before GDP slows to 2% in 2025 and 2026, slightly higher than the initial predictions at 1.8% and 1.9% respectively. Meanwhile, the labor market is also expected to remain tight, with the Unemployment Rate falling to 4% this year, down from the previous projection of 4.1%. Powell said that if any significant weakening in the labor market is detected, it would be a strong reason for the central bank to start the pivot process. As a result, the aforementioned sent the 2-year US Treasury yield down 7.5bps to a yield of 4.62% and the 10-year deflated 1.5bps to 4.281%; while analysts thought the stock market could still go up. The US Dollar also halted its advance as the Dollar Index fell 0.433% and helped the Japanese Yen to experience a technical rebound. Today, the Initial Jobless Claims figure will be released which is predicted to show 212,000 jobless claims in the latest week, slightly up from 209,000 in the previous week. In addition, the S&P Global PMI (Mar) and Existing Home Sales (Feb) figures will complete the set of US economic indicators later tonight.
• ASIA & EUROPE MARKETS: CHINA stocks closed in positive territory after China’s central bank left interest rates unchanged, as expected. ECB President Christine Lagarde reiterated that the European central bank’s decision will be based on economic data released over time, but market watchers have pinned hopes on June being the first month that the European pivot materializes, and there are 4x rate cuts this year. The Euro also triumphed over the US Dollar, closing up 0.51% to USD 1.092/EUR. Elsewhere, the UK announced that their CPI (Feb.) managed to flatten to 3.4% yoy, lower than expected 3.5% and successfully down from the previous month’s 4.0%. JAPAN will again be the focus of attention today as there are some interesting economic indicators from there namely their Trade Balance figures and Export-Import growth in February, followed by the au Jibun Bank Japan Manufacturing & Services PMI (Mar.). Similar PMI figures will also be awaited in Germany, Eurozone and the UK. BANK OF ENGLAND is expected to leave interest rates unchanged at 5.25% at their meeting today.
• COMMODITIES: OIL prices retreated from months highs due to recent USD strength. BRENT prices slid 1.95% to USD 81.68/barrel, US WTI also pulled back from its highest point since last Nov, when the US government released US crude oil inventories dropping 1.952 million barrels, well above the forecast of only 900k barrels, and following a shrinkage of 1.5 million barrels earlier. In other commodities, GOLD was at USD 2185.69/ounce, also slightly retreating from this month’s record high of USD 2194.99/ounce.
• INDONESIA: The General Elections Commission (KPU) has declared Prabowo Subianto-Gibran Rakabuming Raka as the winner of the 2024 presidential election. The KPU’s national recapitulation results consist of votes in 38 provinces and 128 overseas election committees (PPLN). Of the total national valid votes of 164,227,475, Prabowo-Gibran won with 96,214,691 valid votes, far higher than Anies-Cak Imin 40,971,906 votes and Ganjar-Mahfud 27,040,878 votes. The 2024 elections held on February 14, 2024 included the election of the president and vice president, as well as members of the DPR RI, members of the DPD RI, members of the provincial DPRD, and members of the district / city DPRD with a national level permanent voter list (DPT) totaling 204,807,222 voters. The legislative elections, which were participated by 18 national political parties, determined that PDI Perjuangan was the party that received the highest number of 154,548 votes, followed by Gerindra and Nasdem. Centrally, BI’s RDG resulted in the decision to hold interest rates in place at 6.0% pending a more pronounced pivot from the Fed. The Rupiah exchange rate moved slightly to IDR 15,728/USD.
• JCI is still maintained on an upward trajectory with PARALLEL CHANNEL pattern, when Support 7300 was not broken down and only resulted in a slight decline of 5.6 points to close at 7331.12 yesterday. Considering all situations are safely under control, JCI seems to have no reason to not continue its upward move towards the MA10/7350 Resistance today, especially after foreign investors still booked a net buy of Rp. 4 billion (all market) yesterday, piling up the YTD position to become thicker at Rp 27.33 trillion. NHKSI RESEARCH advises investors/traders to AVERAGE UP moderately, once the prices of stocks in your portfolio have managed to break their respective Resistance.
Company News
• DCII: IDR514 Billion Profit in 2023
• GOTO: Adjusted EBITDA Turns Positive in 4Q23
• BREN: Recorded 2023 Revenue to Grow Modestly
Domestic & Global News
• BBI Ensures Japan’s Interest Rate Policy Will Not Affect Indonesia’s Economy
• Reddit Prices IPO at Top of Indicated Range to Raise USD 748 Million
Download full report HERE.
