Today’s Outlook:
• U.S. stocks tumbled on Thursday, dragged by tech and tech-adjacent megacap shares as investors digested mixed quarterly earnings and signs of economic resiliency that could encourage the Federal Reserve to keep interest rates at a restrictive level longer than expected. The Dow Jones Industrial Average fell 0.76%, the S&P 500 lost 1.18%, and the Nasdaq Composite dropped 1.76%. Of the 11 major sectors in the S&P 500, communication services saw the largest percentage loss, falling 2.6%, while real estate gained the most, rising 2.2% on the session.
• The tech-heavy Nasdaq suffered the biggest percentage drop, weighed down by the “magnificent seven” group of megacap stocks in the face of cloudy earnings guidance and the “higher for longer” interest rate scenario. Third quarter reporting season has shifted into overdrive and is nearing its halfway point, with nearly a third of the companies in the S&P 500 slated to post results this week. A number of economic data were released stronger than expected, the highlight of which was the surge in Q3 GDP that grew 4.9% qoq (3.5% yoy, exceeding expectations of 2.5%), the highest figure in almost 2 years, adding to investors’ concerns about the tightening of the Fed’s monetary policy. In addition, Durable Goods Orders (Sept.) saw a significant increase of 4.7% mom, compared to 1.7% forecast and minus 0.1% in the previous month. Pending Home Sales also showed massive growth, from -7.1% in August to positive 1.1% in September. What about employment data which also serves as an important measure of where the US Inflation trend is moving? Initial Jobless Claims last week was recorded at 210 thousand, indeed slightly higher than the estimate of 208 thousand & 200 thousand from the previous week.
• US ECONOMIC DATA: Later tonight, at around 7:30 pm, market participants will closely monitor the PCE (Personal Consumption Expenditure) Price Index (Sept.) which will be an important input ahead of the FOMC Meeting decision on November 1-2. At the end of this week, the Univ. of Michigan’s views on Inflation Expectations & Consumer Sentiment will be taken into consideration in looking at where optimism for economic conditions is going forward.
• EUROPEAN MARKETS: The European Central Bank put brakes on interest rates for the first time after raising them 10 times since July 2022. The ECB benchmark interest rate was held at 4.5% (as expected). The Eurozone will hold the EU Leaders Summit today which will discuss a number of important issues that are heating up in the European region, both from a geopolitical and financial perspective.
• As predicted, JCI continued its consolidation but breaking the Support from the previous low of 6730 this time. This re-opens the risk of further downside, where the most extreme is a return to the most capable Support level that has proven its strength throughout the year, with rebounds often occurring around 6600-6550 levels. Although limited downside potential has been detected, NHKSI RESEARCH still advises investors/traders to maintain a WAIT & SEE attitude for a while longer at the end of this week. It would be interesting to start watching the extreme support levels of the portfolio’s target stocks, but keep a tight money-management positioning.
Company News
• UNVR: Profit Drops by 9%
• TAPG : Recorded IDR1.1 T Net Profit
• NCKL : Prepare IDR1 T Capex in 2024
Domestic & Global News
• China to Limit Graphite Exports, South Korean Battery Makers Rushing for Bulk Buying
• Indonesia Stock Exchange Aims to Sell 1.7 Million Tons of Carbon This Year
Download full report HERE.
