Today’s Outlook:
• World stock markets moved slightly lower on Monday (26/08/24) in the last week of August as investors digested the possibility of US interest rates being cut soon, despite oil prices surging amid rising tensions in the Middle East. The S&P 500 and NASDAQ indices closed in negative territory after rallying earlier in the session, while the Dow Jones Industrial Average managed to rise. European stocks ended slightly lower, with trading in the London market closed for a public holiday. Japan’s leading stock index, the Nikkei, also closed down almost 0.7% on the strengthening Yen. The DJIA rose 0.16% to 41,240.52, the S&P 500 fell 0.32%, and the NASDAQ Composite dropped 0.85%. The MSCI World Index covering global stocks shrank 0.20%. The stock market will digest a lot of news this week after rallying on Friday following increasingly dovish comments from Fed Chairman Jerome Powell as well as the release of good Durable Goods Order data. On the other hand, market watchers are of the opinion that (historically) a rate cut will be followed by stock market weakness as the real reason for the rate cut is to boost the slowing economy. The potential trend reversal is also understandable as the excitement of the rate cut has been priced-in to the current price movement. Other market sentiment will be shaped by NVIDIA’s performance report scheduled to report its results on Wednesday, where market expectations are very high. NVIDIA shares are already up about 160% this year, accounting for about a quarter of the S&P 500’s 18% gain this year.
• ECONOMIC INDICATORS: New orders for US-made durable goods, aka Durable Goods Orders, from toasters to airplanes, jumped 9.9% last July, a strong rebound from a decline in June that surpassed analysts’ expectations, according to Commerce Department data. PCE PRICE INDEX and Core Inflation data will be released on Friday, along with a preliminary reading on EURO ZONE Inflation. Most analysts expect the data to further support a September rate cut. San Francisco Fed President Mary Daly on Monday reinforced expectations for a rate cut next month, even suggesting that a larger magnitude of rate cut could be warranted if the labor market (Aug) weakens further. Market participants will be looking forward to the CB Consumer Confidence (Aug) later tonight at around 21.00 Western Indonesian Time.
• MIDDLE EAST CONFLICT: Israel and Hezbollah fired rockets and conducted airstrikes on Sunday, raising concerns about possible OIL supply disruptions if the conflict escalates. Also supporting crude oil prices was the Libyan government’s announcement to close all oil fields, halting both production and exports. BRENT futures closed up 3.05% to USD 81.43/barrel, while US WTI futures shot up 3.5% to USD 77.42/barrel. GOLD prices rallied, nearing recent record highs on the back of safe-haven asset demand. Gold spot price rose 0.31% to USD 2,518.27/ounce.
• ASIA & EUROPE MARKETS: EUROPEAN CENTRAL BANK chief economist Philip Lane took a more cautious tone in his speech at Jackson Hole, saying the central bank has made good progress in bringing EUROZONE inflation back down to the 2% target, but success is not yet assured. As noted, the ECB has already initiated a rate cut in July of 25bps, with two further @25bps cuts expected by the end of the year. Today will see the following economic data: BOJ Core CPI from JAPAN, GERMANY 2Q GDP which still seems to be in recession territory, complemented by GdK German Consumer Climate (Sep).
• FIXED INCOME & CURRENCY: The 10-year US Treasury yield rose 1.3 basis points to 3.82%. The 2-year bond yield, which typically moves in line with interest rate expectations, rose 2.7 basis points to 3.94%. Fed Fund Rate futures fully priced in a 25bps cut at the September 17 FOMC MEETING, and showed a 39.5% chance of a 50 bps move. The market is also factoring in 103 bps of easing this year and an additional 122 bps in 2025. JAPANESE YEN rose to a 3-week high against the US DOLLAR, with the Dollar falling to 143.45 Yen after reaching a high of 144.56. The DOLLAR INDEX (DXY), which measures the Dollar’s strength over a basket of currencies including the Yen and Euro, rose 0.24% to 100.84, where the Euro fell 0.28% to USD 1.1159.
• JCI has finally hit the 7620 Resistance which will be closely monitored in the next few days for its strength, although yesterday’s JCI gain is still consistently supported by Foreign Net Buy of IDR 929.44 billion (all market). One thing NHKSI RESEARCH needs to remind you is that we saw a slight RSI NEGATIVE DIVERGENCE as JCI made this new high. Therefore, the next few weeks will be critical to determine whether JCI’s bullish wave will be arrested and should pullback first. We expect as long as the RUPIAH exchange rate is still comfortably below IDR 15500/USD then positive sentiment can still be maintained. To be safe, apply TRAILING STOP by using MA10 as the closest Support platform for general market (7480 currently).
Company News
• BNBR: Remove IDR 19.5 Trillion Equity Deficit, Bakrie & Brothers Signals Dividend
• ISSP: Spindo Posted IDR 209.6 Billion Profit, Steel Sales Went Well
• MEDC: Medco Energi Explains the Causes of Declining Oil and Gas Production
Domestic & Global News
Regarding the Discourse on the RKEF Nickel Smelter Moratorium, the Minister of Industry Waits for Bahlil
Russia Strikes Ukraine’s Power Grid in ‘Most Massive’ Attack of War
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