Today’s Outlook:
• US MARKET : The three major Wall Street indexes—Dow Jones Industrial Average, S&P 500, and NASDAQ Composite—closed at record highs on Friday (Oct 18). The Dow rose 1%, S&P 500 gained 0.8%, and Nasdaq jumped 1.2%, driven by strong rallies in major tech stocks ahead of third-quarter earnings season.
U.S. inflation data was the main market focus. The September Consumer Price Index (CPI) rose 3.0% year-on-year, slightly below expectations of 3.1%. Monthly CPI increased 0.3%, also below the 0.4% forecast. Meanwhile, core inflation (excluding food and energy) climbed 3.0% yoy and 0.2% mom, signaling easing price pressures.
The data strengthened market optimism that the Federal Reserve will cut interest rates by 25 basis points at its upcoming policy meeting on October 29. Traders now see a higher likelihood of continued rate cuts if inflation remains on a downward trend.
Adding to the positive sentiment, U.S. and Chinese officials reached a “framework of understanding” on key trade issues during the ASEAN Summit in Kuala Lumpur. U.S. Treasury Secretary Scott Bessent confirmed that both sides agreed to delay new tariffs and halt China’s planned export restrictions on rare earth materials.
This marks a positive signal ahead of the meeting between Presidents Donald Trump and Xi Jinping later this week to finalize the trade agreement. Trump commented, “I think we’re going to get a deal with China,” which lifted global markets and raised hopes for an end to the long-running tariff tensions that have weighed on the world economy.
Looking ahead, market focus shifts to corporate earnings reports, with five of the “Magnificent Seven”—Microsoft, Meta, Alphabet, Apple, and Amazon—set to release quarterly results. Investors are watching closely for signals on cloud computing demand, AI investment trends, and consumer spending strength amid easing inflation.
• EUROPEAN MARKET : European stocks ended the week higher, supported by optimism over the upcoming Trump–Xi meeting to discuss trade. Germany’s DAX rose 0.2%, France’s CAC 40 was flat, and the UK’s FTSE 100 gained 0.7% as investors bet on an improving global economic outlook following lower U.S. inflation data. Commodity and banking stocks led gains in Europe, while energy shares fluctuated alongside global oil price movements.
•ASIAN MARKET: Asian markets rallied sharply on Friday, led by tech stocks after positive news on U.S.–China talks eased trade tensions. China’s Shanghai Composite rose 0.7%, CSI 300 gained 0.5%, and Hong Kong’s Hang Seng added 0.74%, with its tech sub-index surging 1.5%.In Japan, economic data showed mixed signals. Core inflation rose 2.9% yoy, and the “core-core” inflation (excluding food and energy) increased 3.0%, both above the Bank of Japan’s 2% target. However, Japan’s manufacturing activity in October fell to its lowest level in 19 months, signaling ongoing industrial contraction.
Meanwhile, newly appointed Prime Minister Sanae Takaichi is reportedly preparing a major stimulus package to support high-tech investment, counter inflation pressures, and strengthen national resilience. The upbeat sentiment pushed the Nikkei 225 up 1.4% and TOPIX up 0.7%.
• COMMODITIES : Global crude oil prices slipped slightly after a strong rally the previous day. Brent fell 0.1% to USD 65.94 per barrel, while WTI declined 0.5% to USD 61.50 per barrel. The drop came amid investor doubts over the Trump administration’s consistency in enforcing sanctions on two major Russian oil companies linked to the Ukraine war.
Despite the minor pullback, both benchmarks recorded weekly gains of more than 7%—the biggest since mid-June—driven by geopolitical sentiment and prospects of U.S. rate cuts that could boost global energy demand.
• INDONESIA: The Jakarta Composite Index (IHSG) closed slightly lower by 0.03% at 8271.72.
Conglomerate Stocks : If you still favor conglomerate stocks, it’s best to stick with fast or scalping trades due to the less attractive risk-reward ratio. There’s still a chance for a shortterm rebound ahead of the MSCI reindexing catalyst, but risk levels remain high, so tight monitoring of support and resistance levels is crucial.
Rotation to Dividend Players : In recent weeks, market inflows have rotated toward solid, high-dividend stocks, as their yields appear more attractive than bond yields. Despite challenges in sectors like banking (credit growth concerns and asset quality) and consumer (weaker spending power), blue-chip dividend stocks remain appealing for a buy-onweakness strategy. Recent weekly inflow data: ASII: 780B, TLKM: 664.2B, BBRI: 312.4B, BMRI: 295.3B.
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