Today’s Outlook:
• The US stock market ended flat on Thursday (06/27/24) with the NASDAQ leading the gains by edging up 0.3% as investors await the latest inflation benchmark data aka the PCE price index this Friday at around 7:30 pm GMT, after the data showed the slowdown in economic activity continued, raising investors’ hopes for an interest rate cut soon this year. Durable goods orders data rose 0.1% mom in May, albeit above expectations of a 0.5% contraction but in a downtrend from the 0.2% increase in the previous month. The 3rd estimate of US GDP for the 1/2024 quarter also did not budge much from the previous figures, finally staying at the final figure of 1.4%; confirming the US economy in a weakening trend compared to the 3.4% economic growth in the previous quarter. On one hand, Initial Jobless Claims slightly missed with the latest week’s jobless claims report recorded 233k, below expectations and the previous week. From the housing sector, Pending Home Sales for the month of May were still in contraction territory with negative growth of 2.1% mom, following a -7.7% decline in the previous month. All of the above economic data increased investors’ confidence that a demonstrably weaker economy could prompt the Federal Reserve to cut interest rates in September. So far, investors are holding out hope for 2 rate cuts this year, despite the Fed only projecting 1; and there is a 59.5% chance of the first rate cut happening in September; as quoted from LSEG FedWatch data. The Fed officials’ voices are still split even at this point between the hawkish & dovish side. Data from Goldman Sachs shows that hedge funds are aggressively selling Technology stocks at the moment, with net sales in the sector in June being the largest on record. Markets are also on edge ahead of the first presidential debate of this year’s election, between Democratic and Republican candidates Joe Biden and Donald Trump.
• FIXED INCOME: Yields on benchmark 10-year and 2-year US Treasuries, where they move inversely to prices, fell after data showed a continued but moderate slowdown in economic activity, while yields on 7-year Treasuries edged down after a USD 44 billion auction.
• ASIA & EUROPEAN MARKETS: JAPAN just released Tokyo Core CPI figures for June which recorded an increase to 2.1%, higher than forecast & previous period. Although the unemployment rate stayed at 2.6%, Industrial Production proved to be able to increase to 2.8% in May, surpassing expectations of 2.0% and improving the previous month’s negative 0.9% growth. Speaking of Q1 GDP, UK will monitor the data later this afternoon when they expect the first quarter of this year to post an economic growth performance of 0.6% qoq and 0.2% yoy, coming out of recessionary territory in the previous quarter.
• COMMODITIES: OIL futures prices closed higher on Thursday on concerns about global crude supply disruptions as geopolitical tensions in the Middle East and Europe escalated. In contrast, a surprise increase in US crude and gasoline stocks prevented the commodity from climbing higher. BRENT futures closed up 1.34%, to USD 86.39/barrel, while US WTI futures gained 1.04%, to USD 81.74. The US Energy Information Administration (EIA) reported an unexpected weekly increase of 3.6 million barrels in US crude oil stockpiles, contrary to Reuters polled analysts’ predictions of a 2.9 million barrel decline. US gasoline stocks also surprisingly rose by 2.7 million barrels, rather than the expected drop of 1 million barrels. This unsatisfactory figure comes at the height of the summer season, approaching the July 4th Independence Day weekend.
• GLOBAL GEOPOLITICAL CONFLICT: Tensions between Israel and Lebanon’s Hezbollah continue to heat up, raising fears that a wider war could involve other countries including major oil producer Iran. On the one hand, Israel is still launching attacks on the Gaza region; while on the other hand, Houthi militants (Yemen) are also launching attacks in the Red Sea region using several drone boats and missiles against commercial vessels. In Europe, Russia is considering the possibility of downgrading relations with the West due to the deepening interference of the US and its allies in the war in Ukraine. Downgrading relations – or even severing them – would illustrate the severity of the confrontation between Russia and the West (particularly over Ukraine) following the escalation of tensions surrounding the war in recent months.
• JCI again scored a merit of rising past the second crucial Resistance which is rising above MA20, making 6920 level as the closest Support at the moment. JCI is one step away from entering the psychological realm of 7000s again after almost 1% increase yesterday supported by IDR 340.42bn foreign buying flow (RG market). NHKSI RESEARCH sees the closest TARGET now at 7070; which may be reached by the end of this week considering EIDO rose almost 2% last night in the US. However, it is also possible that JCI will only test the 7000 level while waiting for important US PCE price index data that will determine the US & global interest rate policy map.
Company News
• MEDC: Medco Energi Receives Credit Rating Upgrade from S&P
• BSSR: Baramulti Sets Dividend of USD0.021 per Share
• TSPC: Remaining Tempo Scan Dividend IDR 338 Billion
Domestic & Global News
IDR 760.38 Trillion Tax Realization as of May 2024, 38.23 Percent of APBN
Biden and Trump Face off in Early Debate, With Age, Ability in Focus
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