Today’s Outlook:
• Global stock indexes rose to all-time highs and copper prices hit their strongest level in 10 weeks on Tuesday (24/09/24) after China announced stimulus measures to support its economy. The Dow Jones Industrial Average and S&P 500 recorded record closing highs on the back of surging mining stocks. The Chinese Yuan hit a 16 month high against the US Dollar, and oil prices rose to a 3-week high after good news from China, the world’s largest crude importer. The Dow Jones Industrial Average rose 0.20%, to 42,208.22, the S&P 500 advanced 0.25%, and the Nasdaq Composite appreciated 0.56%. The S&P 500 briefly moved lower in the early trading session after data showed US Consumer Confidence unexpectedly fell in September (to a 3-year low) at 98.7, from 105.6 in Aug; amid growing concerns over the health of the labor market there. In response to the data, US Federal Reserve officials said that the Fed will still be very cautious to continue the policy of cutting interest rates as the inflation component is still not comfortable at the 2% target level that the Fed wants. Other officials also called for the Fed not to be too aggressive in continuing the pace of FFR cuts. MSCI’s index of stocks around the world rose 4.51 points, or 0.54%, to 844.56 and reached an all-time high. The STOXX 600 European Index rose 0.65%.
• MARKET SENTIMENT:
— CHINA’S central bank governor, Pan Gongsheng, announced plans to lower borrowing costs and inject more funds into the economy, as well as ease the burden of household mortgage payments. The announcement included a planned 50 basis point cut in the bank reserve requirement ratio. This stimulus package, arguably the largest from China since the pandemic (to lift their economy out of the deflationary trap), inevitably gave a booster to the prices of mining commodities such as Copper & Lithium, as well as to Chinese stocks listed in the US, such as Alibaba which rose almost 8%. The Hong Kong Hang Seng and Shanghai Composite each rocketed 4% yesterday’s close after the news came out.
— US ELECTIONS: The tight race between Vice President Kamala Harris and former President Donald Trump has both candidates gaining almost equal support, according to a CNN poll conducted by SSRS. In an article, the media outlet said that Harris was supported by 48% of likely voters, while Trump came in second with 47%. CNN stated that Harris’ support seems to rest on her personal appeal, with most independent women supporting her, along with younger voters, black & Latino demographics; she is also perceived to be stronger on topics such as abortion rights. While Trump’s support is rooted in his strong economic track record, immigration and foreign policy issues; not to mention a loyal voter base.
• CURRENCY & FIXED INCOME: The Chinese YUAN strengthened 0.65% (highest point in 16 months) against the US DOLLAR to 7.017/USD after reaching 7.0156 in the trading session. The DOLLAR INDEX (DXY) extended its decline after US Consumer Confidence data came out disappointing. The DXY fell 0.57% to 100.35, with the Euro rising 0.59% to USD 1.1178. Against the Japanese Yen, the Dollar weakened 0.31% to 143.15. US TREASURY yields fell in volatile trade as weak US economic data increased the likelihood that the Fed could make another large rate cut at the November policy meeting, although other Fed officials suggested no more cuts as aggressive as this Sept’s FOMC Meeting of 50bps. However, Fed Fund Rate futures estimate a 62% chance of a 50 bps rate cut at the November meeting, up from 54% on Monday, according to LSEG data. Meanwhile, a standard easing of 25 bps showed a probability of 38% on Tuesday. In afternoon trade, the 10-year US TREASURY yield fell slightly to 3.733% after hitting a three-week high of 3.81%.
• ASIA & EUROPE MARKETS: JAPAN’s preliminary PMI readings shed light on a manufacturing sector that seems to be weakening, but is still helped by an increasingly expansive services sector. While in EUROPE, it can be expected that the business climate outlook in GERMANY in the next 6 months is still relatively pessimistic, seen from the German Ifo Business Climate index which fell to 85.4, lower than expectations & the previous period which was above 86 all. Declining consumer confidence also occurred in SOUTH KOREA, and it is important for market participants to pay attention to JAPAN Inflation figures: BOJ CORE CPI which is predicted to come in at 1.8%, still flat from the previous period.
• COMMODITIES: US/US WTI crude oil gained USD 1.19 to settle at USD 71.56/barrel, and BRENT rose to USD 75.17 per barrel, gaining USD 1.27 on Tuesday. The price of the three-month contract of COPPER on the London Metal Exchange jumped 2.7% to USD 9,802/metric ton after hitting its highest level since July 15 at USD 9,825. As is known, China is the world’s largest metal consumer. GOLD spot price climbed 1.15% to USD 2,658.69/ ounce.
• JCI: At the start of trading on Tuesday, JCI fell to a low of 7717.84, due to the fall of BREN share price to an intraday low of 5675 before both index and BREN were able to close in positive territory, where JCI finally posted a slight gain of 2.76pts / +0.04% to 7778.49, supported by IDR 361 billion foreign buying flow. The high volatility of JCI did not move the position of the RUPIAH exchange rate which is still comfortably below 15200 / USD. The current JCI position is still sandwiched between MA10 / 7800 Resistance and MA20 / 7730 Support, making NHKSI RESEARCH to give ADVISE to again increase the WAIT & SEE attitude, and maintain a tight TRAILING STOP level on your stock portfolio, in order to anticipate volatile market movements that may occur. On the one hand, it is interesting to note which sector rotation again opens up trading opportunities, especially those that are exposed to positive sentiment from recent issues, related to China’s stimulus that revives the Mining & Energy sector, which is in line with the characteristics of the domestic stock market itself (commodity-driven).
Company News
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• ISAT: Indosat EGM Approves 1:4 Stock Split
Domestic & Global News
Airlangga: B40 Biodiesel Implementation Saves IDR 404 Trillion in Foreign Exchange
US Nuclear Plants Won’t Power Up Big Tech’s AI Ambitions Right Away
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