Today’s Outlook:

• The Dow Jones Industrial Average bounced on Friday to close out a tough week that saw the index plunge 1,100 points in a single day and complete its longest losing streak since the 1970s. Some cooler-than-expected inflation data helped fuel the session’s rebound. The 30-stock Dow gained 498.02 points, or 1.18%, to 42,840.26. The S&P 500 added 1.09% to end at 5,930.85, while the Nasdaq Composite advanced 1.03% and closed at 19,572.60. November’s reading of the personal consumption expenditures price index — the Federal Reserve’s preferred inflation metric — increased 2.4% year over year. That was a tad less than economists expected and helped defuse some of the bearishness that arose earlier this week when the Fed said it would dial back future rate cuts in part because of stubborn inflation.

• MARKET SENTIMENT: 3Q24 UK GDP, December US CB Consumer Confidence . The United States was plunged into fresh political uncertainty on Thursday evening, after the failure of a Trump-backed spending bill, the passage of which would have prevented a government shutdown. Dozens of Republican lawmakers voted against the deal to fund the government for three months and suspend the U.S. debt ceiling for two years, meaning a partial government shutdown will commence on Friday night. Luckily, Congress passed a separate stopgap funding bill over the weekend, averting a government shutdown.

• CURRENCY & FIXED INCOME: The U.S. dollar pulled back from a two-year high on Friday, but was heading for its third-straight week of gains, with data showing a slowdown in inflation two days after the Federal Reserve cut interest rates and indicated inflation was stubborn enough to scale back cuts in 2025. The dollar was down 0.72% against a basket of six other currencies at 107.64 after spiking as high as 108.54 – its highest level since November 2022. It was set to end the week 0.72% higher. The 10-year Treasury yield retreated on Friday as a key inflation gauge showed cooler-than-expected price pressures. Mid-morning remarks by Chicago Fed President Austan Goolsbee, confirming that rates could still decline next year despite the central bank’s cautious stance, also helped lift bond prices. The yield on the 10-year Treasury fell 4.4 basis points to 4.526% after topping 4.57% the previous day. The 2-year Treasury yield dipped less than 1 basis point to 4.314%.The benchmark 10-year yield is still about 0.10% higher than the 4.40% level where it ended last week. One basis point is equal to 0.01% and yields and prices move in opposite directions.

– The dollar dropped to a five-month low of 157.93 Japanese yen after the Bank of Japan left interest rates unchanged. It was last down 0.89% at 156.01 yen.

• ASIA MARKETS: Asia-Pacific stocks and currencies fell Thursday, amid a broader market sell-off after the U.S. Federal Reserve delivered its third consecutive rate reduction and signaled fewer rate cuts ahead. Investors assessed the Bank of Japan’s decision to keep its policy rate unchanged at 0.25% for the third straight meeting. In response to the central bank’s move, the Nikkei 225 lost 0.69% to end at 38,813.58, while Topix was down 0.22%, finishing at 2,713.83. In South Korea, the Kospi index dropped 1.95% to close at 2,435.93 and the Kosdaq index declined 1.89% to 684.36. The South Korean won hovered near its weakest level since March 2009, and was last trading at 1,452.33 on the U.S. dollar. Hong Kong’s Hang Seng index declined 0.36% in the final hour of trade, while the mainland China’s CSI 300 index edged up slightly to close at 3,945.46. Japan’s Nikkei 225 fell 0.29% after the inflation reading and closed at 38,701.9, while the broad-based Topix slipped 0.44% and finished at 2,701.99. South Korea’s Kospi was down 1.3% to end at 2,404.15, and the small cap Kosdaq lost 2.35% to 668.31, leading Asian losses.

• EUROPE MARKET : closed lower on Friday as investors monitored political turmoil in the U.S. and monetary policy decisions from various major economies. The pan-European Stoxx 600 index ended down 0.78%, with all major bourses and almost all sectors in negative territory. The index was down 1.9% on the week.

– The euro edged higher after dipping to a one-month low of $1.03435 on the session, on track for its third-straight week of losses, weighed down partly by Trump’s comments that the European Union must purchase more U.S. oil and gas to make up for its “tremendous deficit” with the world’s largest economy, or face tariffs. It was last up 0.76% at $1.044175.

• COMMODITIES: Oil prices were little changed at their settle on Friday as markets weighed Chinese demand and interest rate-cut expectations after data showed cooling U.S. inflation. Brent crude futures closed up 6 cents, or 0.08%, at $72.94 a barrel, while U.S. West Texas Intermediate crude futures rose 8 cents, or 0.12%, at $69.46 per barrel. Both benchmarks ended the week down about 2.5%.

– Gold prices extended gains on Friday, supported by a softer dollar and Treasury yields after U.S. economic data indicated a slowdown in inflation. Spot gold was up 1.1% at $2,623.36 per ounce and U.S. gold futures climbed 1.4% higher to $2,643.2.

• JCI closed stable with 5.11 bps (+0.07%) after an exhaustion gap on Thursday following an extensive bearish downtrend. Foreign funds were still consistently selling net sales worth IDR 417.99 billion on Friday, while their YTD position was also Net Selling IDR 27.79 trillion (RG MARKET).Investors/traders are advised to BUY stocks that have been in a strong bearish sentiment last week. RUPIAH exchange rate is entrenched at IDR 16,100-16,350/USD, considering current sentiments, limited upside potential for Rupiah “strengthening” towards 16,100 – 16,000 at the end of this year.

Company News

• SMMA: Sinarmas Group Offers IDR 800M Bonds, with 7-9% Interest
• KEJU: KEJU Approves Buyback and Shares Bonus IDR 206.2M
• TOBA: TBS Energi Receives Approval to Acquire Singapore-based Waste Manager

Domestic & Global News
Airlangga: Regulation on Luxury Goods and Services Subject to 12% VAT to be Issued Before January 2025
US Congress Approves Spending Bill, Government Avoids ‘Shutdown’

Download full report HERE.