Today’s Outlook:
• The S&P 500 gave up most of its gains on Wednesday, due to rising US Treasury yields, but overall the three major US indices still added a fourth consecutive day of gains, with the NASDAQ leading the way by 0.4% at an all-time-high, on the back of a 10% surge in Netflix’s share price which prompted investors to buy Tech stocks again. US Treasury yields edged higher after the release of S&P Global US Manufacturing & Services PMI data which grew further in expansionary territory in January, pointing to underlying strength in the US economy, supporting the notion of no near-term interest rate cut by the Federal Reserve. Furthermore, important economic indicators such as: Thursday’s fourth-quarter US GDP and December’s Personal Consumption Expenditures data due out on Friday; plus the usual weekly Durable Goods Orders and Initial Jobless Claims, as well as the New Home Sales (Dec.) indicator could influence the Fed’s decision-making.
• EUROPEAN MARKETS: HCOB Germany Manufacturing PMI (Jan) is increasingly trying to get out of contraction territory, but is not being offset, as the Services sector is weakening; resulting in the German Composite PMI in January as a whole is expected to remain sluggish, in line with the Eurozone region. However, this was not the case with the UK which managed to record a better PMI performance, although their Manufacture sector was still struggling in contractionary territory but was helped by an increase in the Services sector, so the UK Composite PMI managed to maintain its position in expansionary territory.
• Late afternoon, there will be a number of important economic indicators from Continental Europe such as the German Ifo Business Climate Index (Jan) which is expected to show a slight optimism on the business climate in Germany in the next 6 months. The highlight of the day is the European Central Bank (ECB) decision on interest rates which is expected to remain unchanged at 4.5%.
• ASIA MARKETS: Japan reported au Jibun Bank Japan Manufacturing PMI which has not been able to get out of contraction territory but was offset by an increasingly expansionary Services sector at 52.7. This morning, South Korea has released 4Q23 GDP data which grew to 2.2% YoY higher than expectations and the previous quarter.
• INDONESIA recorded that investment realization in 2023 reached IDR 1,418.9 trillion. This achievement was 101.3% of the target set by President Joko Widodo of IDR 1,400 trillion in 2023. This investment consisted of IDR 744.0 trillion (52.4%) in Foreign Direct Investment (FDI); the rest, IDR 674.9 trillion (47.6%) in Domestic Direct Investment. Meanwhile, investment realization in 2023 was also higher than in 2022. The Ministry of Investment/BKPM noted that Indonesia’s investment realization in 2022 reached IDR 1,207.2 trillion, of which 48.5% was in Java and the remaining 51.5% was outside Java.
• Oil prices edged up about 1% on Wednesday on a bigger-than-expected U.S. crude storage withdrawal, a slump in U.S. crude output, Chinese economic stimulus, geopolitical tensions and a weaker dollar. China’s central bank also cut the amount of cash that banks must hold as reserves by 0,5% from Feb. 5, a move expected to shore up a fragile economic recovery. U.S. crude stockpiles tumbled by 9.2 million barrels last week, the Energy Information Administration said, more than quadruple the 2.2 million-barrel draw analysts forecast in a Reuters poll. U.S. crude output fell from a record-tying 13.3 million barrels per day (bpd) two weeks ago to a five month low of 12.3 bpd last week after oil wells froze during an Arctic freeze.
• Geopolitical tensions remained in focus the day after a coalition of 24 nations led by the U.S. and Britain conducted new strikes against Houthi fighters in Yemen who have been attacking global trade. The U.S. said Iran-backed Houthis have mounted 26 attacks since late November on commercial shipping in the Red Sea which was used by about 12% of global oil trade before the attacks. The U.S. also carried out strikes against Iran-linked militia in Iraq on Tuesday, after an attack on an Iraqi air base wounded U.S. forces.
• JCI still looks Sideways inside the Flag pattern which is suspected to be still in consolidation. Therefore NHKSI RESEARCH suggests that it is important for investors to remain WAIT & SEE, waiting for the JCI breakout direction before making any trading decisions.
Company News
• WTON: Targeting IDR 7.48 T for New Contract in 2024
• BYAN: Allocate CapEx up to USD 260 Million
• WIKA: Achieves IDR 24.2 T Restructuring Agreement
Domestic & Global News
• Indonesia Aims for IDR 1,650 Trillion Investment in 2024, Kadin Warns Political Elites of This
• Tech Company Turmoil Continues, eBay Lays Off 1,000 Permanent Employees in Mass
Download full report HERE.
