Today’s Outlook:

• Global stock markets moved higher in Thursday’s trading (24/10/24) which was quite volatile despite no new sentiment in the market, ending 3 consecutive sessions of declines, while strong US TREASURY YIELD and Corporate performance reports slightly offset concerns over the upcoming US ELECTION results and THE FED’s rate cut projections. The benchmark S&P 500 and Nasdaq indices ended higher, supported by gains in Consumer Discretionary stocks and losses in Materials and Utilities sectors. While the Dow Jones Industrial Average fell 0.33% to 42,374.36, the S&P 500 rose 0.21% and the Nasdaq Composite gained 0.76%. European stocks edged up 0.03%, ending a streak of 3 consecutive sessions of losses following positive results from big-name companies including Renault, Unilever, and Hermes. The global MSCI index appreciated 0.2% to 846.07.

• MARKET SENTIMENT: Market participants seem to think that equity markets are still trading near their highest record levels, despite pausing for the last 3 or 4 days after their high rally. In response to the FED FUND RATE issue, the market expects that the Fed may not cut rates as extensively and quickly as expected. However, the bottom line is that the economy is doing well and the earnings season will soon flood the market with reasonable profit yield expectations. Investors are pricing in a nearly 95% chance of a 25 basis point cut at the November FOMC MEETING, according to the CME FedWatch Tool.

– Around 29% of S&P 500 companies have reported Quarter 3 PERFORMANCE so far, according to data compiled by LSEG, with 81% beating profit estimates. Tesla jumped nearly 22% after CEO Elon Musk gave investors strong confidence on Wednesday, regarding strong car sales growth next year.

– Investors will also be keeping a close eye on the US POLITICAL situation, with a WSJ poll on Wednesday putting former President DONALD TRUMP, the Republican presidential candidate, ahead of his Democratic rival Kamala Harris with 47% to 45% of the vote; suggesting that the November 5 US ELECTION battle will be tight.

• FIXED INCOME & CURRENCIES: The benchmark 10-year US TREASURY YIELD ended lower by 3.4 basis points at 4.208% after reaching 4.26% on Wednesday, which was the highest since July 26. While the yield has risen in recent weeks partly because the US presidential election has created an increased money supply from both candidates, which will widen the deficit. Investment managers consider that an increase in the budget deficit will certainly require more government debt and more supply of government debt will automatically push up yields, especially 10-year sovereign bond yields. US DOLLAR weakened as indications so far support a slower pace of rate cuts by the Fed. The US Dollar weakened 0.6% against the Japanese YEN at 151.84. EURO was up 0.44% at USD 1.0828, while POUNDSTERLING strengthened 0.42% to USD 1.29874. The DOLLAR INDEX (DXY), which measures the greenback’s strength against a basket of currencies including the Yen and Euro, fell 0.4% to 104.02.

• ECONOMIC INDICATORS: INITIAL JOBLESS CLAIMS unexpectedly fell to 227,000 last week, from 242,000 in the previous week, on the one hand indicating the strength of the labor force is still solid but it turns out that the number of people claiming unemployment benefits in mid-October was the highest in nearly three years, indicating that it is increasingly difficult for those who have lost their jobs to find new positions. The Federal Reserve’s BEIGE BOOK report released on Wednesday illustrated that employment had increased slightly in early October, and the strong payrolls helped the market reassess the likely size of future rate cuts by the Federal Reserve.

– The housing market is also looking strong with NEW HOME SALES in Sept rising above expectations at 738k, higher than both estimates and the previous month’s 709k. Speaking of PMIs, the composite S&P GLOBAL PMI issued a preliminary estimate that US manufacturing & services business activity in Oct all simultaneously strengthened, showing signs of a US economy far from recession.

– For today, market participants will look forward to Durable Goods Orders (Sept) data and an outlook on Inflation and consumer sentiment in the next 6 months from the renowned University of Michigan.

• COMMODITIES: GOLD prices rose close to record highs amid safe haven demand from fears of continued geopolitical tensions, as investors sought safety from the closely watched US Election results on November 5. Gold spot prices rose 0.69% to USD 2,736.10/ounce, while futures still closed 0.7% higher at USD 2,748.9.

– OIL prices dropped around 1% in volatile trading on reports that the US and Israel will try to restart talks on a possible ceasefire in GAZA. BRENT crude oil prices closed 0.8% lower at USD 74.38/barrel, while US WTI crude oil shed 0.8% to USD 70.19. Earlier in the session, both oil benchmarks were trading up by more than USD 1/barrel on concerns that the MIDDLE EAST CONFLICT could result in supply disruptions and uncertainty ahead of the US presidential election on November 5. However, traders think that the volatility of these matters is likely to be insignificant in the longer term, especially their influence on the stock market; although currently the price of Oil can be said to be moving zigzagging in a fairly wide range. As is known, after IRAN fired missiles at ISRAEL on October 1, Brent crude oil jumped about 8% during the week ending October 4 on fears that Israel would attack Iran’s oil infrastructure. Oil prices then fell about 8% in the week ending October 18 due to reports that Israel would not attack energy infrastructure, thus easing fears of supply disruptions. Iran is an OPEC+ member and produces about 4 million barrels of oil per day (bpd) by 2023, according to data from the US Energy Information Agency. Iran is on track to export about 1.5 million bpd in 2024, up from an estimated 1.4 million barrels of oil per day in 2023, according to analysts and US government reports. Iran is known to be behind several groups fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen.

• EUROPE & ASIA MARKETS: In Europe, the EUROZONE business activity stagnated again this month, staying in contractionary territory as both domestic and foreign demand fell despite firms barely raising their prices. In the UK, optimism among British companies has slumped, according to two surveys published on Thursday, 6 days before Finance Minister Rachel Reeves tries to map out a way between raising taxes and boosting growth in the new government’s first budget. Today from GERMANY will be monitored the German Ifo Business Climate Index (Oct) which sheds light on how market sentiment will be in the next 6 months.

– On the Asian continent, JAPAN has released TOKYO CPI figures this morning which came in at 1.8% yoy for both headline and core CPI, which although higher than the expectation of 1.7%, but in a downward trend compared to the previous month above 2 percent.

• After losing 71pts or minus almost 1% on Thursday’s trading, JCI is expected to test the strength of MA10 Support at 7690 level today, which if unsuccessful in holding the decline will make JCI continue consolidation to the next Support: MA20 / 7620. Foreign Net Sell yesterday amounting to IDR 463 billion (RG market) seems to be triggered by President Prabowo’s statement which mentioned a plan to write off the debts of 6 million farmers & fishermen to banks, so that the farmers & fishermen can get credit from banks again. Automatic sell-off in the banking sector occurred on BBRI BMRI which is allegedly heavily loaded on MSME loans. NHKSI RESEARCH thinks that there will be many clues from the new cabinet’s work plan in the future, and thus advises market participants to WAIT & SEE first at the end of this week, while paying attention to rolling market catalysts to determine which sectors / stocks are suitable for trading.

Company News

BSDE & SMDM: Absorbing IDR 2.33 Trillion, BSDE is the New Controller of Suryamas
MAHA: Got the Approval! Mandiri Herindo Starts IDR 200M Share Buyback
BREN: Geothermal Expansion Project Starts, BREN Targets to Absorb IDR 2.56 Trillion

Domestic & Global News
CHT Not Increasing, This is What Industry Players Expect from Prabowo’s Government
BRICS Ditch US Dollar, Putin to Xi Jinping Agree to Use Local Currencies in Transactions

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