Today’s Outlook:

• Wall Street stocks closed lower on Thursday’s trading (04/25/24) with the DJIA leading the way down by nearly 1%/375points, as markets were surprised by slower-than-expected US economic growth data amid persistently smoldering inflation, coupled with a sell-off in large-cap stocks triggered by Meta Platforms’ disappointing performance. US GDP for QUARTER 1 this year grew at the slowest pace in almost 2 years at 1.6% qoq, missing forecasts of 2.5% and also down from 3.4% in the previous quarter; while the benchmark Core PCE Prices Inflation surprisingly rose in the first quarter, increasing by 3.7% (above forecasts of 3.4% which had also firmed from 2.0% in the previous quarter). Thus the preliminary US GDP estimate further dashed hopes that the Federal Reserve could start cutting interest rates this year. The money market immediately priced in only around 36 basis points of Fed rate cuts this year, down from around 150 bps expected at the start of the year (according to LSEG data); and the first rate cut is unlikely to happen before December. US Treasury yields rose after the economic data was released. Weaker economic growth but strong inflation raised concerns of stagflation, although some economists noted that the economy may not be as weak as the GDP report suggests. Separately, another economic indicator, INITIAL JOBLESS CLAIMS, said the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, indicating that labor market conditions remain tight. The March Personal Consumption Expenditure (PCE) price index, which is the Fed’s favorite gauge of inflation, will be released on Friday where it is expected to come in at 2.6% yoy, indeed it will be slightly higher than 2.5% in the previous month.
• FROM FINANCIAL REPORT SENTIMENTS: a lackluster result from Meta whose shares plunged nearly 11% weighed on market sentiment as well. Three other Magnificent Seven stocks, including Alphabet (NASDAQ:GOOGL), (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT), ended lower.
• EUROPE & ASIA MARKETS: In other parts of the world, market participants are also still seeing a sluggish consumer climate from the GfK German Consumer Climate data for May and the 6-month outlook. Similarly, in the UK their Consumer Confidence is still sitting on a negative/pessimistic view. In contrast, South Korea posted stronger than expected economic growth, growing by 3.4% yoy in the 1st quarter, above the 2.4% predicted. This morning Tokyo has reported their region’s CPI fell to 1.8% yoy in April, below the 2.6% forecast; indicating that people’s purchasing power is still relatively weak. The Bank of Japan will announce their interest rate decision later this morning which is likely to be around 0.1% after they raised rates for the first time in 17 years in March.
• COMMODITIES: OIL prices rose in early trade on Friday, after traders quoted US Treasury Secretary Janet Yellen stating that the US economic growth could be stronger than the recently released quarterly data, as this is just a preliminary estimate and the GDP figure could be revised once further data is gathered. On the other hand, supply concerns due to rising geopolitical tensions in the Middle East also sentimentally boosted Oil prices. Israel stepped up airstrikes on Rafah after declaring it would evacuate civilians from southern Gaza and launched an all-out assault despite allied warnings that this could lead to heavy casualties. BRENT crude oil rose 0.38% to USD 89.35/barrel, and US WEST TEXAS INTERMEDIATE (WTI) crude oil futures rose 0.39% to USD 83.90/barrel.
• JCI closed in negative territory, down 19.24 pts/-0.27% to 7155.29 being dragged down by banking stocks. Foreigners are still posting consistent net sell, this time recorded a net sell of IDR 1.3 trillion (all markets), so that capital outflow in the past week has totaled around IDR 3.17 trillion and in the past month evaporated IDR 17.19 trillion from the equity market. The RUPIAH exchange rate position slightly “strengthened” to 16131/USD, although it looks like Rupiah above 16000 will be the new normal for some time to come. NHKSI RESEARCH advises investors/traders to maintain a WAIT & SEE stance for the rest of the week as negative sentiment in the regional market increases.

Company News

• UNVR: Recorded IDR1.44 T Profit in 1Q24
• UNTR: Agreed to Distribute IDR8.2 T Dividend
• BBRI: IDR15.88 T Profit in 1Q24

Domestic & Global News
• BI Rate Rises, Entrepreneurs Suggest to Hold Expansion
• US-China Officials Meeting Overshadowed by Threat of Sanctions

Download full report HERE.