Today’s Outlook:
• Major US stock indexes saw modest gains on Wednesday (26/06/24) after a fairly volatile trading session, where investors took a wait-and-see stance ahead of the presidential debate and a closely monitored inflation report by the Federal Reserve. Shares of leading chipmaker Nvidia eventually closed flat up 0.25%, erasing thicker intraday gains earlier in the session; a day after its price rose more than 7% on the back of optimistic sentiment regarding AI. Other major companies such as Apple, Amazon.com, and Tesla also recorded gains; bringing the NASDAQ Composite to lead the gainers by 87.50 points, or 0.5%, to 17,805.16. Shares of Amazon Inc rose nearly 4%, taking its market value over USD 2 trillion, making it the fifth US company to surpass that level. In addition to the first presidential debate this Thursday, market participants are looking forward to several important economic data releases scheduled this week, culminating in Friday’s PCE (Personal Consumption Expenditures) price index, the Federal Reserve’s favorite inflation indicator in order to determine the direction of monetary policy. The market is currently divided into two camps, either expecting the Fed to make just one rate cut this year in December; or there is also a camp that sees 2 cuts by the end of the year, where the first 25 bps rate cut has a 56.3% chance of occurring in September, according to the LSEG interest rate probability application. Once Inflation data proves to be under control, analysts anticipate sector rotation from Technology sector to other laggard sectors this year as long as it is supported by positive corporate earnings data. Meanwhile, major US bank stocks such as Morgan Stanley, Citigroup, and Bank of America fell ahead of the release of the results of the annual stress test conducted by the Federal Reserve on the banking sector. In general, the S&P 500 financial index lost 0.47%.
• ECONOMIC INDICATORS: US New Home Sales fell 11.3% mom in May where the number shrank to 619k (lower than expectations of 636k), compared to the previous month of almost 700k. Similarly, Building Permits contracted 2.8% mom although this figure recorded a slowing pace of decline. Later tonight will be awaited a number of important economic indicators such as: Durable Goods Orders (May), the third estimate (or final number) of US GDP Q1 which is likely to still state the sluggish US economic growth at 1.3% qoq; and not forgetting the weekly Initial Jobless Claims which is predicted to be around 236k.
• ASIA & EUROPE MARKETS: This morning JAPAN reported several data related to Retail Sales (May) which strengthened 3.0% yoy, which is good news amidst a surge in foreign selling in their bond and stock markets. Following in the morning, CHINA will publish Industrial Profit YTD (May) to compare if there was an increase in profits from the industrial sector in the previous month of 4.3%. Later in the afternoon, the EUROZONE region will report several data on business climate & consumer expectations such as Business Climate & Consumer Survey (Jun), Consumer Confidence & Inflation Expectation (Jun), Services & Industrial Sentiment (Jun).
• COMMODITIES: OIL prices finally closed higher after weakening earlier triggered by US Crude Oil Inventories data which showed US crude oil stockpiles had swelled by 3.6m barrels, far missing Reuters analyst estimates of a 2.6m barrel drawdown; again raising concerns of sluggish demand this summer. Initially, this brought unfavorable sentiment for Energy stocks, but it turned out that the development of geopolitical tension in Israel vs Lebanon (which was feared to spill over to the oil producing country, Iran) was more dominating sentiment. BRENT futures rose 0.3% to USD 85.25/barrel, while US WTI futures appreciated just 7 cents to USD 80.9/barrel. UBS analysts expect oil prices to rise in the coming weeks, although traders are concerned about weak US gasoline consumption during the country’s peak summer road trip season. Gasoline use in the US represents about 10% of the world’s total oil consumption, and gasoline demand in the country last week fell 3.6% year-on-year to about 8.9 million barrels/day. Fuel stocks also increased unexpectedly even as refineries reduced production.
• JCI seems to be waiting for a significant trigger in the market to break the decisive Resistance: MA20 / 6940-6950, which will release it towards the strengthening TARGET: psychological level of 7000, up to MA50 / 7070 as a short-term TARGET. NHKSI RESEARCH assesses that related sentiment is still around US economic data such as PCE price index which will play a role related to global central bank interest rates in general & USD/IDR in particular. Therefore, Indonesian capital market investors/ traders are also advised to wait for the break out of this crucial level before deciding to Average Up, while paying attention to the revival of the Finance sector as the main pillar of JCI.
Company News
• PTRO: Petrosea Director Collects PTRO Shares
• SMDR: Samudera Indonesia (SMDR) Agrees to Distribute Dividends of IDR 262 Billion
• MBMA: Absent Dividend, MBMA Receives Right Issue Approval for 10.79 Billion Shares
Domestic & Global News
World Bank Predicts Indonesia’s Deficit Will Not Exceed 3% Despite Free Nutritious Meal Program
Volkswagen-Rivian Deal: VW Shares Slip on Cost Concerns, Rivian Soars
Download full report HERE.
