Today’s Outlook:

• The S&P 500 closed at record highs Thursday (22/02/24) after Nvidia reported stronger-than-expected last year’s fourth quarter earnings, and forecast first quarter revenue at about USD 24 billion, more than what analysts were expecting. The DJIA closed up 1.2%, the S&P500 jumped 2.1% and the NASDAQ skyrocketed 3%. On the other hand, economic indicators showed the strength of the US economy as the latest week of Initial Jobless Claims was again released lower than expected (actual: 201k versus forecast: 217k, and also lower than the previous period: 213k). This data came out a day after the minutes of the Fed’s January meeting which indeed still maintains high interest rates higher for longer in the near future. In addition, the US PMI data also showed that manufacturing activity expanded further in February, while the services sector slowed somewhat. Existing Home Sales saw a slight increase for January, showing the health of the US property sector is fairly stable. In light of the above economic indicators, it is not surprising that the 10-year US Treasury yield rose to a 3-month high of 4.35%, amid market expectations for the Fed to cut interest rates soon. It is possible that the expected first pivot will be pushed back to July, which turns out to be more likely than previous months, one of a series of planned cuts of around 80bps this year.
• ASIA & EUROPE MARKETS: Speaking of yesterday’s PMIs, Japan reported preliminary data from au Jibun Bank Japan Manufacturing & Services PMI which was still slow in February. Meanwhile in neighboring South Korea, interest rates remained at 3.5%. A number of PMI data in Europe also explained that manufacturing & services sector activity was still struggling in contractionary territory, except for the HCOB Eurozone Services PMI (Feb) which finally began to cross over to the expansionary border (exactly at 50), a performance not seen since September 2023. On the other hand, the UK showed a stronger Composite PMI, while the slowdown in the manufacturing sector was helped by services activity there. More good news from the Eurozone: they managed to control the inflation rate as expected, reaching 2.8% yoy in January, slightly down from 2.9% in the previous month. This afternoon will be monitored Germany’s GDP figures which still seems unable to get out of the recessionary realm as consensus expects Germany’s economic growth in the 4th quarter of last year to be at a level of minus 0.2% yoy, although it is expected to improve slightly from the previous quarter – 0.4%.
• COMMODITIES: OIL futures prices closed higher on Thursday as security threats in the Red Sea continued due to Houthi militants’ incursions into nearby Yemeni territory; on the one hand, bulging crude oil inventories offset sentiment. Brent oil futures closed up 0.77% to USD 83.67/barrel, while US WTI gained 0.9% to USD 78.61/barrel. Israeli Military Radio reported yesterday that Prime Minister Benjamin Netanyahu’s cabinet has agreed to send negotiators to Gaza for ceasefire discussions to take place in Paris. Meanwhile, Houthi attacks on commercial vessels in the Red Sea escalated to include armed submarines, in an attempt to show support for the Palestinian side of the Gaza war. Speaking of other commodities, ALUMUNIUM & NICKEL were seen rallying 1.8% and 1.3% respectively after US President Joe Biden plans to impose major sanctions on Russia following the death of opposition leader Alexey Navalny.
• JCI has been testing the crucial Resistance 7370 for the past week, although it still ended without any meaningful result; while buying momentum looks weak as depicted in the RSI indicator. The buoyant regional market sentiment will certainly help the bullish aura to stay in the market, but NHKSI RESEARCH must remind once again to ensure a solid break out first before adding to portfolio positions, especially with end of week timing like today. However, trading opportunities are not ruled out especially in the mineral mining sector which has been getting good wind recently, and other news-driven sectors.

Company News
•ITMG: Net Profit Declines 58.30%
• PGEO: Seeking Funds of IDR163 Billion
• IMAS: Partnering with VKTR

Domestic & Global News
• Sri Mulyani: IDR 184.2 Trillion State Expenditure Realization as of January 2024, Including Social Aid
• On the Brink of Recession, Japan’s Factory Activity Worsens

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