Today’s Outlook:
• The S&P 500 Index closed lower in Thursday’s trading, pressured by rising US TREASURY yields while investors opted for caution a day before Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole symposium which ends on 24 August. The Dow Jones Industrial Average fell 177 points, or 0.4%, the S&P 500 lost 0.8%, and the Nasdaq Composite plunged 1.6%. Markets widely expect Powell to reiterate the central bank’s dovish stance, which paves the way for a rate cut in September, although it is not yet clear whether the Fed chief will explicitly signal a cut in September. In a similar vein, Kansas City Fed President Jeffrey Schmid said he needs to see more economic data before supporting any decision to start reducing rates.
• ECONOMIC INDICATORS: Data released earlier on Thursday showed that the number of Americans filing jobless claims rose by 4,000 to 232,000 in the latest week, adding to concerns about a cooling US labor market. This followed revised Payroll data on Wednesday’s showing, where the US economy created 818,000 fewer jobs than previously reported in the 12- month period to March 2024. This actual growth was almost 30% lower than initially reported, with the revised payroll total being the largest since 2009. Adding to concerns about the economy, manufacturing activity declined more than expected, although fortunately it was still backed up by the services sector so overall the S&P GLOBAL US COMPOSITE PMI was still able to strengthen in expansionary territory. Housing market growth also picked up with EXISTING HOME SALES (Jul) recorded at 3.95 million, higher than expected & previous period. Analysts at Citi said they see a 50 bps reduction as their baseline scenario for September, especially after the FED MEETING MINUTES released on Wednesday showed more central bank officials leaning towards lower interest rates. Speaking of the property market, the NEW HOME SALES (Jul) data is the most awaited later tonight around 2100hrs.
• ASIA & EUROPE MARKETS: PMI data is scattered across the globe, starting yesterday from JAPAN which reported that both manufacturing and services sectors managed to grow in Aug from the previous month. However, the opposite situation occurred in GERMANY, causing their Composite PMI to fall further into contraction. Weak manufacturing conditions also occurred in EUROZONE but they were helped by the strengthening of the services sector, therefore the Composite PMI could still grow in expansionary territory. The champion of all was the UK which recorded expansionary growth across all sectors, both manufacturing and services. Specific to the ASIAN continent, SOUTH KOREA’s central bank set interest rates to remain unchanged at 3.50% as expected. This morning saw the release of Japan’s NATIONAL CPI (Jul) figures which saw Core Inflation strengthen in line with expectations to 2.7% yoy.
• COMMODITIES: OIL prices rose more than 1% on Thursday, as expectations of a US rate cut in the coming weeks fueled a price recovery after 4 days of declines. BRENT crude oil futures closed up 1.54%, to USD 77.22/barrel, while US WTI gained 1.5%, to USD 73.01. The US DOLLAR fell recently amid concerns regarding the weakening economy, which supported the buying interest of oil buyers from non-US countries. In the Middle East, Iran-allied Houthi militants continued to attack international commercial vessels in solidarity with Palestinians in the war between Israel and Hamas. A Greek-flagged oil tanker carrying 150,000 tons of crude oil that was evacuated by its crew after being attacked in the Red Sea now poses an environmental hazard, according to a report by the European Union navy “Aspides” stationed in the Red Sea.
• The JCI went downside after almost touching the Resistance (year-end TARGET) 7600, creating a very natural pullback wave, especially when there was social unrest in the capital yesterday. JCI had to retreat 66pts / -0.87% to 7488.68 level even though foreign net buy still consistently came in worth IDR 1.59 trillion (RG market). Coinciding with the large demonstration that took place in front of the House of Representatives parliament building yesterday, the RUPIAH seemed to weaken to 15595/USD from its previous position that was below 15500; although this was mostly due to the DOLLAR INDEX (DXY) that seemed to strengthen slightly after touching the 2023 low. NHKSI RESEARCH thinks investors/traders should take a step back at the end of this week while JCI looks for a solid Support level to arrest this oncoming decline, possibly aiming for 7420-7400 / 7330-7350 levels
Company News
• BBNI: Pocketing IDR 10.7T Profit Up 3.8 Percent in the First Semester
• BSDE: Profit Skyrocketed by 94%
• ASSA: TP Rachmat Issuer Aims for Double Digit Revenue Growth in 2024
Domestic & Global News
Solution to Improve Textile Industry, Protection or Incentives?
Exclusive: Israeli Demands for Troops in Gaza Blocking Truce Deal, Sources Say
Download full report HERE.
