Today’s Outlook:
• Most global stock markets fell again in volatile trading on Thursday, adding to losses after a Tech sector-led sell-off in the previous session, while the Japanese Yen was flat after hitting a 2.5-month high against the US Dollar. Most US megacaps initially rallied before giving back their gains by the end of the session. Tesla shares were last up 2%, while Nvidia shares fell 1.7%. The small-cap Russell 2000 index rose 1.3%. The Dow Jones Industrial Average rose 81 points, or 0.20%, while the S&P 500 fell 0.5%, and the NASDAQ Composite plunged 0.9%.
• ECONOMIC INDICATORS: Data showed that the US economy grew stronger than expected in the second quarter, helped by solid growth in consumer spending and business investment, while inflationary pressures eased, so expectations of a Federal Reserve rate cut in September remain intact. US GDP grew 2.8% yoy in the second quarter, stronger than the 2.0% forecast, and also from the previous quarter’s 1.4% growth. However, the GDP PRICE component, which is a measure of inflation, in the report fell to 2.3%, from 3.1% in the first quarter. Further signs of slowing inflation have supported the prospect of more feasible interest rate cuts by the Federal Reserve this year starting September, by at least 2x totaling 66bps. Meanwhile, a separate report showed Durable Goods Orders contracted 6.6% in June, compared to expectations of a 0.3% increase. The Fed is scheduled to hold its next policy meeting in late July. Markets see little chance of a rate cut of at least 25 basis points (bps) at the meeting, but fully expect a cut in September, according to CME’s FedWatch tool.
• EARNINGS SEASON: Investors remain focused on earnings reports, this week mainly from top US Tech company related names. IBM shares jumped 4.3% on Thursday after reporting encouraging earnings.
• ASIA & EUROPEAN MARKETS: MSCI’s index of stocks around the world fell 5.80 points, or 0.72%, to 796.78. The STOXX 600 index fell 0.72%. Investors are looking forward to next week’s Bank of Japan meeting which may see an interest rate hike. The DOLLAR INDEX, which measures the strength of the US Dollar against a basket of other major world currencies including the Yen and Euro, rose 0.01% to 104.39. Against the Japanese Yen, the Dollar was close to flat at 153.91. The Japanese Yen this week surged sharply as market participants ended their long-term bets against the currency. In addition, the global stock sell-off has also pushed investors towards the Yen.
• FIXED INCOME: Long-dated US TREASURY YIELD fell as the latest weakness in the stock market helped fuel demand for safe-haven bonds, while solid readings on US economic growth failed to alter Fed Fund Rate expectations. The 10- year US Treasury yield fell 2.8 basis points to 4.258%.
• COMMODITIES; OIL prices rose after strong US economic data boosted demand expectations in general. US crude oil (US WTI) rose 69 cents to settle at USD 78.28/barrel and BRENT rose 66 cents to settle at USD 82.37. While spot GOLD fell 1.61% to USD 2,358.99 / ounce; triggered by the surprise of China’s central bank cutting long-term interest rates, sparking further concerns about a slowdown in the world’s second largest economy which is the world’s number one gold buyer.
• JCI fell to a low of 7207.82 on Thursday, but eventually closed around the second support of MA20 at 7240.3. Interestingly, the sell-off that continued for the second consecutive day was accompanied by Foreign Net Buy worth IDR 398.3 billion. Today we will look forward to INDONESIA FDI data, as well as important US PCE PRICE INDEX data; therefore NHKSI RESEARCH suggests to WAIT & SEE to see market interest while anticipating US data surprises later tonight.
Company News
• UNVR: Shrinks 10 Percent, UNVR First Half of 2024 Records Profit of IDR 2.5 Trillion
• WIFI: Surge and Nokia Collaborate to Improve Internet Services
• TAPG: TP Rachmat’s Palm Oil Issuer Achieves 105 Percent Profit Increase in the First Semester
Domestic & Global News
Car STLG Discount to be Extended, Economist Warns on State Expenditure Efficiency
Harris on Israel Gaza War, Palestinian Suffering: ‘I Will Not Be Silent’
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