Today’s Outlook:

• The S&P500 and NASDAQ fell sharply at the close of trading on Wednesday (24/07/24), the biggest daily decline since 2022 triggered by the collapse of Tech stocks following disappointing earnings reports from megacaps Alphabet & Tesla. The NASDAQ Composite led the fall by collapsing 3.6%, the S&P500 depreciated 2.2%, while the DJIA lost 1.3%, closing below the psychological 40,000 level for the first time in two weeks. FINANCIAL REPORT season was marked by TESLA shares falling 12% after its Q2 earnings report fell short of forecasts due to falling vehicle sales, causing profit margins to plunge to a 5-year low after the electric car maker aggressively cut prices of its cars to compete with other competitors such as Chinese cars. Shares of Google’s parent ALPHABET also fell by almost 5% despite their 2nd quarter performance being above expectations on the back of rising ad sales and strong demand for their cloud services, but the market saw declining performance in Youtube. As Tesla & Alphabet are the first 2 companies of the “Magnificent Seven”, it is only natural that investors became quite nervous waiting for the reports of the other 5 megacaps and decided to take profits. CBOE VOLATILITY index, Wall Street’s “fear index” closed at 18.04, the highest point since April. Even a more dovish call from one of the Fed’s notoriously conservative officials was unable to provide support to the markets. Bill Dudley, former President of the New Federal Reserve said that the Fed could cut interest rates as soon as even at next week’s meeting on July 30-31, in fact the economic data has been supportive, making the view of higher interest rates for longer irrelevant. The US ECONOMIC DATA released last night more or less eliminated the concern that the US could fall into recession, with Building Permits rising above expectations offsetting the fact that New Home Sales in June were recorded in a downward trend. The S&P GLOBAL COMPOSITE PMI was recorded to be firmly in expansionary territory thanks to the Services sector being stronger than the Manufacturing sector. Later tonight there is another set of macroeconomic indicators that will shape the perception of the market’s next direction, namely: Durable Goods Order (Jun), and the highlight is the preliminary estimate of US GDP 2Q (forecast: 2.0% qoq vs previous: 1.4%); not forgetting Initial Jobless Claims which estimates there were 237k jobless claims in the latest week (lower than the previous week’s 243k).

• ASIA & EUROPE MARKETS: Speaking of PMIs, the JAPAN, GERMANY, EUROZONE Manufacturing sectors all plummeted in contractionary territory, causing the overall Composite PMI to fall and some even crossed below the 50 level. On the other hand, the UK was the one country that was able to keep their Manufacturing & Services sector activity in expansionary territory causing the Composite PMI to still be safely perched at 52.7 (up from estimates & previous period). This morning SOUTH KOREA started the announcement of their first estimate of 2Q GDP which fell 0.2% qoq, bringing the annualized figure to 2.3% yoy, clearly in a downtrend compared to consensus 2.5% and previous quarter 3.3%. From Sakura Country’s neighbor, JAPAN reported sharply shrinking foreign investment interest in bond & stock purchases. Market players are bracing themselves for a tsunami wave (at least) in Asian stock market today in the face of negative sentiment from regional market.

• COMMODITIES: OIL prices ended higher on Wednesday thereby snapping 3 consecutive sessions of declines, supported by a large drop in US crude and fuel stocks, but prices were still near a 6-week low on concerns over weak global demand. BRENT futures for September closed up 0.9% at USD 81.71/barrel. The US WTI contract for September gained 0.8%, to USD 77.59/ barrel. US crude oil inventories shrank by 3.7 million barrels last week, according to data from the Energy Information Association, far more than analysts’ expectations in a Reuters poll that forecast a decline of only 1.6 million barrels. The market thinks there is a healthier increase in demand and there will be price support in the short term; especially when prices are under downward pressure following ceasefire talks between Israel & Hamas, as well as continued concerns over economic weakness in China, the world’s largest crude importer. At the same time, crude shipments to India, the world’s third largest oil importer and consumer, also fell in June to the lowest level since February. So far, US WTI prices have fallen 7% over the previous 3 sessions, while Brent has lost almost 5%. Another factor supporting prices is the wildfires in Canada, which will force some producers to limit production and threaten large supply disruptions. Meanwhile, the Russian Energy Ministry pledged to keep meeting the crude production quota set by the OPEC+ group in July, after their June production exceeded the limit.

• Calls for JCI positioning alert have been voiced in recent days as JCI looks stuck in the Resistance 7350-7375 region. While Indonesia awaits today’s FDI data, NHKSI RESEARCH again reminds investors/traders to anticipate further selling wave after breaking the first Support: MA10 below the 7385 level (= so the nearest Resistance at the moment), towards the second Support: MA20 / 7230 up to 7207 which is the previous low. Closing below 7200 will drag JCI down further towards the stronghold of 7100 or psychological level of 7000. Yesterday’s foreign selling value of IDR 368.77bn (all market) managed to erode JCI by 51pts / -0.7% to below 7300, closing at 7262.

Company News
• HMSP: HM Sampoerna’s Profit Slumped 11.7 Percent in the First Half of 2024
• SIDO: Soaring 36 Percent, SIDO’s Profit as of June 2024 Reached IDR 608M
• AMAR: Amar Bank Recorded Profit Up 15.03 Percent in the First Half of 2024

Domestic & Global News
Airlangga Coordinating Minister: KUR Restructuring Continues, Waiting to be Regulated by OJK
Goldman Sachs: China Holds Fiscal Stimulus to Face Trump Threats

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