Today’s Outlook:
• Global stock indexes were mostly lower in Wednesday’s trading (25/09/24), triggered by the Energy sector which slid 1.9% on the back of lackluster Oil prices, while US Treasury yields rose as investors clung to the view that the Federal Reserve will be able to create a soft landing for the US economy. The Dow Jones Industrial Average retreated regularly 293.47 points, or 0.70%, to 41,914.75, the S&P 500 edged down 10.67 points, or 0.19%; while the Nasdaq Composite edged up 7.68 points, or 0.04%. MSCI’s global stock index fell 0.95 points, or 0.11%, to 843.61. The STOXX 600 European index fell 0.11%. The pullback in the global indices was seen as a breather as they have enjoyed a recent rally, pricing-in the Fed’s interest rate cut action.
• MARKET SENTIMENT: In the US, data on Wednesday showed new home sales fell in August, following Tuesday’s data that showed US consumer confidence fell by the most in 3 years in September, adding to concerns about the difficulty of finding jobs at the moment (similar to the conditions in Sept 2001, when the US economy was in recession). As the month draws to a close, CITI Group analysts expect only 70k new jobs to be added in this month’s Payroll data, down considerably from the previous figure. The Unemployment Rate will also hover around 4.3%, possibly even touching 4.4%. Thus, they expect the Fed to be even more dovish with a 50bps rate cut in November as well. In the Fed Fund Rate survey, traders now expect a 59% chance of a 50 basis points cut at the November 7th FOMC MEETING, up from 37% a week ago, and a 41% chance of a 25 basis points cut, according to CME FedWatch.
• WHAT TO EXPECT: Today investors will be watching the Durable Goods Orders (Aug) figure, the final US GDP 2Q reading which is expected to come in around 3.0% qoq, as well as the weekly Initial Jobless Claims. The important economic indicator PCE PRICE index will follow on Friday.
• CURRENCY & FIXED INCOME:
— CHINA’S YUAN wiped out earlier gains a day after China’s central bank rolled out the biggest stimulus since the pandemic to pull the economy out of deflation and back towards the government’s growth targets. The US Dollar was last up 0.33% at 7.033 Yuan in overseas trade; having earlier briefly hit 6.9952, its strongest since May 2023. The US DOLLAR recovered from 14-month lows against the Euro in volatile trade. EURO was last down 0.41% at USD 1.1134 after previously reaching USD 1.1214, the highest since July 2023. The DOLLAR INDEX (DXY) rose 0.68% to 100.91 after earlier dropping to 100.21, matching the lowest since September 18, the weakest since July 2023. As a result, the US DOLLAR strengthened 1.03% to 144.68 JAPAN YEN and reached 144.75, the highest since September 3.
— In the BOND market, the latest 10-year US TREASURY YIELD traded up 4.9 basis points to 3.784%. Since the rate cut on September 18, the 10-year yield has risen about 3 basis points.
• COMMODITIES: OIL prices fell as fears of supply disruptions in LIBYA eased, overriding the fact of a big drop in US Crude Oil Inventories. The number of commercial oil barrels stored by US oil companies disappeared by 4.471 million barrels over the past week, much more than the expected loss of 1.3 million barrels. Still, US WTI prices fell USD 1.87 to close at USD 69.69/barrel and BRENT fell to USD 73.46/barrel, down USD 1.71 on the day. In other commodities, GOLD rose to record highs as expectations of further large rate cuts by the Fed supported the bullion rally. Gold spot price rose 0.2% to USD 2,662.00/ounce, after hitting a record high of USD 2,670.43.
• JCI is holding on to its dear life with very thin above Support MA20 / 7739.2 where the closing position of JCI yesterday was 7740.9, even after struggling to rise from a low of 7633.45. Suspicion of capital outflow to China after they released the recent stimulus package was further answered by the fact that foreigners sold quite massive net yesterday worth almost IDR 2 trillion (RG market), mostly in big bank stocks such as BBRI BMRI, not to mention BREN which was hit by an issue with FTSE RUSSELL. Considering this vulnerable position, NHKSI RESEARCH sees this consolidation as necessary & normal when valuations of Indonesian index movers (plus global) are already at a high. Thus we advise investors/traders not to take too big positioning this week, except in sectors that benefit from China’s stimulus sentiment such as commodity & energy, where maybe we can still find trading opportunities there.
Company News
• HEXA: HEXA Distributes USD 38.9 Million Dividend
• AALI: AALI Disburses IDR 161.6M Interim Dividend, Here’s the Schedule
• DOID: Secures AUD200 Million Mining Contract in Australia
Domestic & Global News
Bauxite Entrepreneurs Suffer, Government Called to Strengthen Mineral Benchmark Prices
US Leads New Effort to End Hostilities in Lebanon and Gaza, Sources Say
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