Today’s Outlook:

• Global stock indexes managed to close in positive territory in a fluctuating trading session while oil prices fell on Tuesday (27/08/24) as investors weighed geopolitical risks as well as Nvidia’s upcoming earnings report and US inflation data. Market sentiment is still anticipating the imminent start of the Federal Reserve’s monetary policy easing next month, after Fed Chairman Jerome Powell said on Friday that the US central bank was ready to start cutting interest rates. Wall Street’s major indices closed higher in volatile trade, with the DJIA edging up 0.02% to its latest record closing point of 41,250.50, the S&P 500 advancing 0.16%, and the NASDAQ appreciating 0.16%.

• EUROPEAN & ASIAN MARKETS: European stocks ended up 0.16%, tracking the rally in Japan’s NIKKEI index, which ended up 0.47%. MSCI’s all-country stock index rose 0.15% to 831.24. Canada followed the lead of the United States and the European Union, to impose 100% tariffs on electric vehicle imports from CHINA and 25% tariffs on imported steel and aluminum from China. JAPAN reported BOJ Core CPI at 1.8% yoy, below expectations of 2.1%; likely to deter the central bank from raising interest rates sometime in the near future. While in GERMANY, they released a slightly better economic growth rate in Q2, as GDP no longer plunged into recessionary territory as expected & the previous quarter, although not sure if it was really saved to positive growth territory (= flat 0.0% yoy, quarterly still negative 0.1% qoq as expected). Thus, it is not surprising that there are predictions that the German consumer climate outlook in general for Sept will still be sluggish.

• COMMODITIES: GOLD traded above USD 2,500/ounce on expectations of interest rate cuts and concerns regarding the escalation of MIDDLE EAST CONFLICT, which was exacerbated by Israel and Hezbollah attacking each other last Sunday. Tensions in the Middle East – along with concerns about the potential closure of Libyan oil fields – had led to a surge in OIL prices of more than 7% over the previous 3 sessions. However, the rally lost momentum on Tuesday, causing prices to retreat again. Oil prices fell, with BRENT ending down 2.3% to USD 79.55/barrel, while US WTI crude shed 2.4% to USD 75.53.

• MARKET SENTIMENT: Investors are anxious ahead of Nvidia’s earnings report on Wednesday, they will be highly sensitive to its actual results which is a measure of whether the AI-driven Tech sector rally still has room to expand or may soon run out of steam aka the sector bubble popping. Keep in mind, Nvidia accounts for almost  5% of the S&P 500’s revenue and almost 7% of the market capitalization weight, so it is very significant in terms of its influence on the overall market. CB Consumer Confidence rose to a 6-month high in August as fears of an economic recession eased despite Americans growing increasingly anxious about the labor market, according to data on Tuesday.

• CURRENCY & FIXED INCOME: The DOLLAR INDEX (DXY), which measures the greenback’s strength against a basket of currencies including the Yen and Euro, fell 0.3% to 100.55, with the Euro up 0.21% to USD 1.1184. The yield on the benchmark 10-year US Treasury note rose 1.5 basis points to 3.833%. Investors are betting on a rate cut of 25 basis points or 50 basis points in September, with the odds of a 25 bps cut around 71%, while the odds of a 50 bps cut are around 29%, according to the CME Fed Watch Tool.

• INDONESIA: The government will extend the 100% value-added tax (VAT) exemption incentive policy for property purchases until December 2024. JCI closed slightly lower at 7597.88 accompanied by IDR 543.97 billion foreign sell-off (all markets), thus forming a Doji-like candle around the Resistance area, while RSI showed negative divergence. NHKSI RESEARCH needs to issue another warning that as DJIA is also in the Resistance area which is prone to pullback with the slightest non-market-friendly data, it is expected that JCI will also experience a brief consolidation after rallying quite significantly from the August bottom of 6998.2. However, trading opportunities are not ruled out with regards to sector rotation that benefits from positive sentiment surrounding the industry.

Company News

• ANTM: Ready to Acquire Tsingshan Group Smelter, Here’s Why
• ARCI: Archi Establishes Drilling Joint Venture
• DMAS: Puradelta is Optimistic to Reach IDR 1.8T Pre-Sales Target in 2024

Domestic & Global News
Packaged Food Beverage Manufacturers Lobby Government to Cancel Excise Tax on MBDK
Ukraine’s Zelenskiy to Present Plan to Biden to End War With Russia

Download full report HERE.