Today’s Outlook:
• The Technology sector pushed Wall Street’s main stock index to a higher closing level, while Crude oil prices posted their biggest weekly decline in a month on Friday trading (18/10/24) as investors shrugged off mixed earnings reports and focused solely on Netflix’s solid performance; as well as Beijing’s policy measures to boost Chinese demand. In the commodities corner, Gold managed to cross the USD 2,700 mark for the first time. Investment managers see gold as a safe-haven asset experiencing strong gains due to many uncertainties. Tech-adjacent megacap momentum stocks also pushed the Nasdaq up 0.63%, while Friday’s gains in the S&P 500 and Dow Jones Industrial Average were more moderate at 0.4% and 0.09% respectively but both reached record closing highs. All three indices posted a sixth consecutive week of gains, the longest weekly streak since late 2023.
• MARKET SENTIMENT:
– A series of COMPANY FINANCIAL REPORTS ranged from buoyant to gloomy, with streaming platform Netflix showing strong subscriber additions, while consumer products company Procter & Gamble reported a surprise drop in sales as demand for its products slowed.
– ECONOMIC INDICATORS: Building Permits (Sept) and Housing Starts (Sept) both fell more than expected and also compared to Aug. But thanks to data on Thursday showing US Retail Sales increased 0.4% in September, more than anticipated, while Initial Jobless Claims fell unexpectedly; the figures still maintain hopes of a “soft landing” for the US economy.
– US ELECTION: From small caps to Bitcoin to Dollar, some investors are looking for assets that could thrive under a second Donald Trump administration. Electability polls suggest the former president has taken a lead over Vice President Kamala Harris, although Harris has a narrow lead in this week’s Reuters/ Ipsos poll. Trump’s trade is expected to focus on the power of tariffs, deregulation, and larger deficits. The Mexican peso, for example, is down 4% from its September high as investors worry about tariffs. Shares of Trump Media & Technology Group are up more than 140% since September 23. Some analysts see the Trump effect in the recent rise in bond yields and the US Dollar. The difficulty is separating politics from economics.
• FIXED INCOME & CURRENCY :
– US TREASURY YIELD fell as markets consolidated following big gains over the last month; market participants are used to the Fed’s less dovish stance in the face of stronger-than-expected economic data. The yield on the benchmark 10-year US Treasury note fell 2.1 basis points to 4.075%, from 4.096% on Thursday afternoon. The yield on the 2-year US Treasury note, which typically moves in line with interest rate expectations, fell 3.7 basis points to 3.95%, from 3.987% on Thursday afternoon.
– The US DOLLAR slipped after 5 consecutive sessions of gains as risk appetite improved following China’s stimulus announcement. However, the greenback looks set to record its third consecutive weekly gain. The DOLLAR INDEX (DXY), which measures the greenback’s strength against a basket of currencies including the Yen and Euro, fell 0.28% to 103.49, with the Euro up 0.3% at USD 1.0864. Against the Japanese Yen, the Dollar weakened 0.45% to 149.53.
• ASIA & EUROPEAN MARKETS: Data on Friday showed CHINA’S economy grew at its slowest pace since early 2023 in the third quarter. CHINA 3Q GDP grew 4.6% yoy, above the 4.5% forecast in a Reuters poll but below the 4.7% pace in the second quarter. Industrial output and retail sales increased and beat expectations, but the property sector remained mired in decline. This morning will see another interest rate decision from the PEOPLE’S BANK OF CHINA (PBOC), where consensus expects them to lower the 5Y (Oct) Loan Prime Rate to 3.65%, from 3.85% previously, as well as the short-term benchmark rate to 3.15%, from 3.35%.
– CHINA STIMULUS: China’s central bank launched two funding schemes on Friday that will initially inject as much as 800 billion Yuan (USD 112.38 billion) into the stock market through newly created monetary policy instruments. The PBOC outlined the operational details of the swap and re-lending schemes first announced in late September, which aim to support the stable development of the capital market.
– EUROPEAN stocks closed higher, helped by a resurgence in Technology stocks at the end of a volatile week, apart from mixed earnings reports as well as from the EUROPEAN CENTRAL BANK (ECB) rate cut. UK published strong Retail Sales figures on an annual and monthly basis. The STOXX 600 recorded its second weekly gain. MSCI’s worldwide stock index advanced 5.04 points, or 0.59%, to 857.11. The STOXX 600 index rose 0.21%, while the FTSEurofirst 300 Europe index appreciated 4.81 points, or 0.23%. Emerging market stocks surged 1.73%. Later this afternoon at around 13.00 GMT GERMAN PPI (Sept) which is expected to struggle with the possibility of deflation again.
• COMMODITIES: Next month’s OIL futures prices fell and are on track for their biggest weekly decline since early September on growing concerns about demand from China, as well as traders parsing the mixed outlook on the MIDDLE EAST CONFLICT. US WTI crude fell 2.05% to USD 69.22/barrel, while BRENT slumped to USD 73.06/barrel, down 1.87%. In other commodity corners, GOLD prices breached the USD 2,700 mark for the first time as the safe-haven precious metal continues to benefit from global uncertainty. Gold spot price rose 1.01% to USD 2,719.75/ounce.
• INDONESIA: President-elect PRABOWO SUBIANTO and Vice President GIBRAN RAKABUMING RAKA officially entered the State Palace after the inauguration ceremony on Sunday (20/10/24) at Nusantara Building, parliament complex, Jakarta, at 10:00 am. Later that evening, the eighth president of Indonesia also announced the composition of his cabinet, named the Merah Putih Cabinet. He announced at least 48 ministers and five ministerial-level officials in his cabinet, as well as 56 deputy ministers to serve the 2024-2029 period. A number of ministers from the Joko Widodo administration are returning to Prabowo’s cabinet, including Sri Mulyani, Bahlil Lahadalia, Tito Karnavian, and Budi Arie Setiadi. In his maiden speech before lawmakers, Prabowo discussed a variety of issues, ranging from corruption, poverty, food self-sufficiency, energy self-sufficiency, downstream commodities, to Palestine.
• JCI: closing the last day of stock exchange trading in the era of former president Joko Widodo’s administration, JCI gained 25pts / +0.32% to 7760.06 level last Friday, accompanied by foreign capital inflow of IDR 319.35 billion. Although this strengthening further strengthened JCI’s position above important support, the Doji candle that was created slightly speaks of a potential pullback for a moment, perhaps to 7680 or 7620-7590 levels. NHKSI RESEARCH also needs to remind us, if JCI chooses to continue north beyond 7800 then we can be sure that the TARGET to the All-Time-High of 7900 or even the END OF YEAR TARGET (which has been revised) of 8000 level will be achieved sooner.
Company News
• ADRO: Explain the EGM Results on AAI Spin-off
• SMMT: Golden Eagle Energy Plans Private Placement of 315 Million Shares
• MDKA: Merdeka Copper Optimizes Metal Production at Tujuh Bukit Banyuwangi Mine
Domestic & Global News
Not Only Food Self-Sufficiency, Prabowo Wants Indonesia to be Energy Self-Sufficient
Lebanese Flee as Blasts Hit Beirut, Israel Warns of Strikes on Hezbollah Finance Arm
Download full report HERE.