Today’s Outlook:
• The S&P 500 hit a record high on Thursday (01/23/25) after US President Donald Trump said he was demanding interest rates be lowered soon (even globally), giving the stock market a boost amid investor caution in the face of further financial developments. In a sign of his upcoming policies, Trump told business leaders at the World Economic Forum in Davos, Switzerland, on Thursday that he wanted to lower global oil prices, interest rates and taxes, and warned of tariffs on exports to the United States. As is known, investors are most concerned about Trump’s possible tariff plans. Without new details, uncertainty weighed on the bond market. US Treasury yields rose for a second day as bond investors braced for tariffs that could trigger inflation. But yesterday the S&P 500 managed to close up 0.5% after hitting an all-time high of 6,118.73, the Dow Jones Industrial Average strengthened 0.9% and the Nasdaq Composite appreciated 0.2%. The MSCI global index also rose 0.5%. From an economic indicator perspective, the latest US INITIAL JOBLESS CLAIMS data yesterday showed that there was an increase in jobless claims by 6,000 from the last week recorded (higher than expected). Today will be the day of PMI announcements in many parts of the world, including the US which will also release Existing Home Sales (Dec) figures.
• EUROPEAN & ASIAN MARKETS: In EUROPE, the STOXX 600 index, which hit a record high on Wednesday, edged up 0.4%, as selling pressure on Tech stocks eased after Trump announced a $500 billion private sector AI infrastructure investment plan called Stargate. The joint venture, involving Oracle, OpenAI, and SoftBank, initially spurred a rally in global stock markets, which was further supported by optimism over earnings. In Asian markets yesterday, Japan’s NIKKEI rose 0.8%; SoftBank shares jumped 5%.
• – GERMANY & EUROZONE will be looking forward to today’s PMI data, followed by the UK.
• – In CHINA, the government announced plans to channel hundreds of billions of Yuan of investment from state-owned insurance companies into stocks, just after Trump said he proposed imposing 10% tariffs on Chinese imports. The blue-chip CSI300 index ended up 0.18%, while the Yuan weakened against the Dollar to 7.289 in offshore trading.
• CURRENCY & FIXED INCOME: The DOLLAR INDEX (DXY), which measures the greenback’s strength against a basket of six major currencies, dipped to a near 2-week low of 108.10. The EURO was steady at $1.04180, while the POUNDSTERLING rose to $1.2353. After Trump’s comments on interest rates, the rate-sensitive 2 year US TREASURY was largely unchanged, as the FEDERAL RESERVE, like many other central banks worldwide, is independent.
• Ahead of the BOJ’s policy decision on Friday, the dollar rose to a one-week high against the yen at 156.19 before retreating to 155.97. The market has fully priced in a 25 basis point interest rate hike at the end of the BOJ meeting, to a 17-year high of 0.5%. BOJ Governor Kazuo Euda’s press conference will be awaited by market participants regarding the next policy scenario, which is most likely to be a dovish one for Japanese assets, with the BOJ more likely to dampen; rather than stoke investor expectations; regarding the pace of further tightening, even as wage growth picks up. While waiting for the BOJ meeting, JAPAN has also released its national inflation figures (Dec) which have indeed warmed up as expected, especially if confirmed by the growth of the au Jibun Bank Services PMI (Jan). COMMODITIES: OIL prices remain below $80 a barrel, under pressure after Trump said he would ask Saudi Arabia and OPEC to lower oil prices. Investors are also concerned about how Trump’s proposed tariffs could affect global economic growth and energy demand. The price of BRENT crude oil also fell 1.4% to $ 77.89 per barrel.
• INDONESIA will await the growth figure for Foreign Direct Investment (FDI) compared to previous data at 18.6% yoy as of October, the highest since July 2023.
• IHSG: a very unfortunate sight, when yesterday the High touched the level of 7324.6, clearly breaking out the Resistance upper channel that has been guarding the downtrend pattern since September last year; finally it had to be closed in a minus 24pts / -0.34% position to the level of 7232.6. It seems that this sluggishness is still not supported by strong foreign buying interest, because yesterday Foreign Net Buy was only recorded at a thin IDR 18 billion in all markets. This morning USD / IDR began to fall to the level of 16208.5, helped by Trump’s outlook demanding interest rates to fall not only in the US, but also throughout the world; causing DXY to start losing its bullish ground. The government’s latest policy regarding the obligation of EXPORT FOREIGN EXCHANGE PROCEEDS (DHE) sourced from natural resources (SDA) 100% must be parked in banks in Indonesia for 1 year (effective from March 2025) should also support the value of the RUPIAH in the future. NHKSI RESEARCH believes that if USD/IDR confirms a break below 16200, it will create breathing space for the strengthening of the Rupiah towards 16080 – 16000, or towards 15800-15700. On the other hand, the JCI, which has so far reached its short-term target of 7300, still has to find more motivation to stay above that number, in order to validate the next target towards 7470-7500. At the end of this week, NHKSI RESEARCH suggests taking a (half) WAIT & SEE stance, while paying attention to the sentiment of the Finance sector which is starting to release FY 2024 financial reports.
Company News
• EXCL & LINK: Axiata to Divest Link Net (LINK) Worth IDR 16 T
• CMNT: Cemindo Signs USD 1.05M Loan for Capital
• PALM Pays Off Debt, Provident (PALM) Offers IDR 612.2 Billion Bonds
Domestic & Global News
Get Ready! New Export Proceeds (DHE) Regulations Effective March 1, 2025
Trump Announces America’s Efforts to Become an AI Hub Through New Executive Order
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