Today’s Outlook:
• The S&P 500 has slid 2.5% week to date, while the Dow has seen more modest losses with a retreat of just 0.4% Both are down nearly 3% on the month. Traders have been rattled by President Donald Trump’s promise of tariffs and recent economic reports flashing warning signs. A decline of 8.5% in megacap tech titan Nvidia in Thursday’s session the back of earnings threw more cold water on investor sentiment. Investors on Friday will closely monitor January data for the personal consumption expenditures price index. Economists polled by Dow Jones expect the measure of price changes for consumers to rise 0.3% from December for an annualized gain of 2.5%. Excluding volatile food and energy prices, so-called core PCE is expect to increase by 0.3% month over month and 2.6% year over year. Economic data on personal income and consumer spending is also expected in the morning.
• – The path of interest rate cuts by the Federal Reserve has become less clear, with markets pricing in 58 basis points of easing by year-end, and a cut of at least 25 bps not topping 50% until the June meeting. Federal Reserve Bank of Cleveland President Beth Hammack said she expects U.S. central bank interest rate policy is on hold for the time being. Philadelphia Federal Reserve Bank President Patrick Harker expressed support for continuing to hold short-term U.S. borrowing costs in their current range.
• MARKET SENTIMENT : US’ January Core PCE Price Index will be released on Friday with the February Chicago PMI numbers. In the European theatre, Germany’s February inflation numbers will be come out. Moving halfway around the globe to Asia, China’s February Manufacturing PMI data will also be churned out.
• FIXED INCOME AND CURRENCY : U.S. Treasury yields were higher on Thursday as investors studied the latest weekly jobless claims, January durable goods orders and President Donald Trump’s most recent tariff threats. The benchmark 10-year yield Treasury yield rose 3 basis points to 4.281%, and the 2-year Treasury yield was marginally higher at 4.074%. The dollar jumped on Thursday and was poised for its biggest daily percentage gain in more than two months as U.S. President Donald Trump’s latest tariff comments overshadowed signs of slower economic growth. The dollar index climbed 0.72% to 107.23, on track for its biggest daily percentage gain since December 18. The euro slumped 0.74%, on pace for its biggest drop since January 2, to $1.0405. The greenback initially pared gains after data showed weekly initial jobless claims rose by 22,000 to a seasonally adjusted 242,000, above the 221,000 estimate of economists polled by Reuters. Other data from the Commerce Department showed gross domestic product increased at a 2.3% annualized rate last quarter after accelerating at a 3.1% pace in the JulySeptember quarter in its second estimate of the data. But the dollar quickly rebounded after Trump said 25% tariffs on Mexican and Canadian goods will go into effect on March 4 as scheduled because drugs are still pouring into the United States from those countries.
• EUROPE : The Stoxx 600 provisionally closed 0.51% lower, paring earlier losses, as autos shed 4%. The highly globalized sector was rattled earlier this month by expectations of escalating U.S. trade friction with the rest of the world. Data earlier this week showing a 2.6% year-on-year decline in passenger car sales have further dampened sentiment around the industry. European markets were broadly lower Thursday after U.S. President Donald Trump on Wednesday once again threatened to impose 25% tariffs on imports from the European Union.
• – The European Central Bank is expected to cut rates next week to 2.50%, according to all 82 economists polled by Reuters who expected two further cuts by mid-year. Sterling weakened 0.51% to $1.2608.
• ASIA : Asia-Pacific markets were mixed Thursday, after key Wall Street indexes rose amid fresh tariff threats from U.S. President Donald Trump. Australia’s S&P/ASX 200 traded 0.33% higher to close at 8,268.2. Japan’s Nikkei 225 traded 0.3% higher to close at 38,256.17 while the Topix added 0.73% to close at 2,736.25. South Korea’s Kospi slipped 0.73% to end the trading day at 2,621.75, while the small-cap Kosdaq dipped 0.07% to close at 770.85. Shares of Japanese convenience store operator Seven & i Holdings fell over 10% after the proposed acquisition by its founding family failed to secure financing, according to a company filing. This comes after the Yomiuri newspaper reported that Seven & i has abandoned the management buyout plan, which was pegged at over 8 trillion yen ($53.69 billion). Hong Kong’s Hang Seng Index lost 0.61% while mainland China’s CSI 300 added 0.21% to close at 3,968.12.
• – Against the Japanese yen , the dollar strengthened 0.52% to 149.85. Bank of Japan Governor Kazuo Ueda told reporters at the close of a Group of 20 finance meeting in South Africa it was notable that many countries had warned of high global economic uncertainty.
• COMMODITIES : OIL prices rose more than 2% on Thursday as supply concerns resurfaced after U.S. President Donald Trump revoked a license granted to U.S. oil major Chevron to operate in Venezuela. Trump also said tariffs on Mexico and Canada would go into effect on March 4. Those tariffs include a 10% levy on energy imports from Canada. However, investors were still keeping an eye on signs of a potential peace deal in Ukraine, which could result in higher Russian oil flows. Brent crude oil futures gained $1.51, or 2.08%, to close at $74.04 a barrel. U.S. West Texas Intermediate crude oil futures rose $1.73, or 2.52%, to settle at $70.35. The contracts had settled in the previous session at their lowest levels since December 10. GOLD was down 1.1% at $2,885.13 an ounce after hitting its lowest level since February 12 earlier in the session. Prices hit a record high of $2,956.15 on Monday, driven by safe-haven flows. Gold prices dropped to their lowest level in over two weeks on Thursday as the U.S. dollar strengthened, with investors waiting for key inflation data that could shed light on the Federal Reserve’s monetary policy path.
• JCI broke below its solid support at 6500. NHKSI anticipates JCI to be at a sideways trend below 7000 as a solid resistance and 6393 as the next base support after breaking out of its previous solid psychological support at 6500. On Thursday, the regular market suffered another Net Foreign Sell of IDR 1.78 tn in the regular market. As USD/IDR is set to be hovering around IDR 16,500-16,200 for the medium term, we view this to be a stable footing for Indonesia’s currency currently eventhough it indicates currency weakness amongst regional peers.
Company News
• ASII: Minimalist Growth, Astra (ASII) Earns IDR 34.05 Trillion in 2024
• TAPG: Surplus 95 Percent, TP Rachmat Issuer Earns IDR 3.12 Trillion Profit
• DSNG: Surging 37 Percent, DSNG 2024 Recorded IDR 1.14 Trillion Profit
Domestic & Global News
DPR Expects PNBP to Increase after Coal Exports Must Use HBA
Trump Says Tariffs on Canada & Mexico to Take Effect on March 4
Download full report HERE.
