Today’s Outlook:
• Global stock indexes were mostly in the green on Monday (22/07/24) as investors digested US President Joe Biden’s decision at the weekend to end his re-nomination, while a surprise interest rate cut by China’s central bank moved Asian markets. On Sunday, Biden announced that he would withdraw from the US presidential race in favor of Vice President Kamala Harris as his Democratic successor to challenge former president Donald Trump, the Republican nominee. Markets responded positively to the news, with MSCI’s worldwide stock index rising 0.75% to 816.92; after falling 2.1% last week in its worst weekly performance since April. Market strategists see the current higher-electability Trump administration as supporting more risk-on, driving small-cap stocks, boosting oil and gas prices, and bringing Bitcoin back into the market. The US DOLLAR moved marginally higher against a basket of currencies, intercepting safe-haven fund flows; while BITCOIN – which is likely to benefit from a higher chance of Trump returning to the White House – stabilized after falling on Sunday following Biden’s announcement. The DOLLAR INDEX rose 0.1% to 104.32, with the Euro up 0.07% to USD 1.0885. Bitcoin, which hit a 6-week high last week in its strongest weekly rally since February, traded more steadily on Monday, up 1.76% to USD 68,158. On Wall Street, all three major indices ended in positive territory, led by gains in the Technology and Communication Services sector. Nvidia rose almost 5%, boosted by news that it is working on new AI chips for the Chinese market. The Dow Jones Industrial Average rose 0.32% to 40,415.44, the S&P 500 gained 1.08% to 5,564.41, and the NASDAQ Composite soared 1.58% to 18,007.57. Investors will be paying attention to a week packed with COMPANY INCOME REPORTS. Tesla and Google’s parent company Alphabet kick off the reporting season for the “Magnificent Seven” group of megacap stocks. US TREASURY was little changed as markets digested the uncertainty surrounding the US Election, with the yield on the 10-year rising 1.7 basis points to 4.256%. MACROECONOMICALLY, the preliminary estimate of 2Q US GDP will be released on Thursday and the PCE PRICE INDEX on Friday, both are seen as important as the basis for the Fed’s decision. As for the market, it is now almost fully price-in the prospect of a rate cut by the Federal Reserve in September, which helps support risk appetite.
• ASIA & EUROPE MARKETS: PEOPLE’S BANK OF CHINA unexpectedly cut short-term and long-term interest rates by 10 basis points each, to 3.35% and 3.85% (5Y). The move follows the release of a Chinese government policy document at last Sunday’s plenary meeting outlining its ambitions to strengthen the economy. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.61%. EUROPE’s largest banks also reported their results this week, with attention focused on whether the benefits of higher interest rates are behind them, and whether recent political drama is affecting sentiment. The STOXX 600 closed shot up 0.93%. This morning SOUTH KOREA released PPI data (June) which came in at 2.5% yoy (up from the previous month’s 2.3%), although on a monthly basis PPI contracted 0.1% (versus 0.1% in May). Speaking of Foreign Direct Investment, there will be two countries today releasing their FDI growth, namely INDONESIA & CHINA. For your information, China’s last FDI fell 28.2% in May, and Indonesia’s was at 15.5%.
• COMMODITIES: OIL prices continued their decline after closing last week with significant weakness, on fears of sluggish demand from China (as the world’s largest crude oil importer). BRENT futures fell 0.3% to settle at USD 82.40/barrel, the lowest position since June 11. US WTI futures for August delivery ended down 35 cents to USD 79.78/barrel, also the lowest level in 1 month. Morgan Stanley forecasts that oil production from OPEC and non-OPEC countries will reach 2.5 million barrels/day by 2025, outpacing demand growth (= an indication of potential oversupply) which threatens to send Brent prices into the USD 70s/barrel. In terms of other commodities, GOLD prices edged down to a more than 1-week low. Spot Gold fell 0.07% to USD 2,398.32/ounce. US gold futures rose 0.28% to USD 2,402.10 per ounce.
• JCI was able to record a 27.5points / +0.38% gain to 7322 level supported by thin foreign net buy of IDR 11.5 billion (all market). Indeed JCI is still struggling in the Resistance area of 7300s, up to 7375 as Resistance from 2-month high. From the RSI indicator stated the potential negative divergence, signaling a potential pullback will occur soon, in buying momentum when JCI approached the Resistance area for the second time it looks like it started to decline. NHKSI RESEARCH sets the nearest Support level as Trailing Stop for investors at 7285 or MA10; before rolling towards the second Support: 7200 level or MA20.
Company News
• ROTI: Salim Group’s Bread Issuer’s Profit Soars, Take a Peek at the Latest Factory Progress
• INDY: Indika Energy Opportunities to Expand Mineral Mining Business
• BSDE: BSD City (BSDE) Developer Secures IDR 4.84 Trillion Pre-Sales
Domestic & Global News
Investment in Special Economic Zones (SEZs) Reached IDR 205.2 Trillion
China Unexpectedly Cuts Interest Rates to Boost Economy
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