Today’s Outlook:
• MSCI global stock indexes moved lower and the US Dollar weakened along with US Treasury yields on Wednesday (27/11/24) as investors digested the latest economic data and the potential policy impact of the US administration under new president Donald Trump, including the threat of tariffs. Oil prices closed almost flat after a surprisingly large increase in US gasoline inventories and concerns about the outlook for US interest rates in 2025 offset easing concerns about the supply of the ceasefire deal between Israel and Hezbollah – Lebanon.
• MARKET SENTIMENT: Equity markets weakened after data showed US consumer spending accelerated in October, indicating the economy is maintaining a strong pace of growth but the pace of slowing inflation has stalled recently. In the 12 months to October, core inflation, tracked by the Federal Reserve for monetary policy aka CORE PCE PRICE INDEX, increased 2.8% yoy after rising 2.7% in September. Economists think it is expected that Inflation will increase slightly, but not yet out of control so they believe this still paves the way for a 25 basis point cut in December and then perhaps a pause after that. After the data was released, traders bet on a 70% probability of a Fed rate cut in December, up from a probability of about 59% on Tuesday, according to CME FedWatch. As a result on Wall Street, the Dow Jones Industrial Average fell 138.25 points, or 0.31%, to 44,722.06, the S&P 500 lost 0.38%, the Nasdaq Composite drained 0.60%. The global MSCI stock index slipped 0.10%, while the European STOXX 600 index followed suit by closing minus 0.19%.
– Investor reaction also took into account President-elect Donald Trump’s threat on Monday night to immediately impose 25% tariffs on all products from Mexico and Canada when he takes office in January, and impose an additional 10% tariff on goods from China. The threats have triggered warnings of retaliatory attacks from the countries concerned.
– Wednesday’s market movements are likely to be affected by lower liquidity before Thursday’s US Thanksgiving holiday. Thursday’s market close will be followed by a shorter trading day on Friday.
– JPMORGAN set its 2025 target for the S&P 500 index at 6,500, which implies a potential upside of 8% from current levels. The target is driven by projected earnings growth of 10%, with earnings per share (EPS) reaching USD 270 next year. JPMorgan cites a combination of monetary policy easing, strong AI-driven capital expenditure, and increased market breadth as key catalysts for the expected growth. Smaller companies, particularly within the Russell 2000 index, are also projected to bounce back strongly, resulting in profit growth of 40% after years of decline. According to JPMorgan’s note on Wednesday, the US economy remains critical to this outlook, emphasizing the theme of the US is expected to maintain its role as the engine of global growth.
• ECONOMIC INDICATORS: US Consumer Confidence (Nov) was slightly below consensus, but in overall still higher than Oct. The concern is the health of the property sector as New Home Sales in Oct plummeted to the lowest level not seen since 2010.
– Initial Jobless Claims which had been released earlier in anticipation of the Thanksgiving holiday stated that in the last week jobless claims decreased by 2k to 213k, compared to the previous week.
– The Q3 US GDP estimate was still in line with expectations at 2.8% qoq, helped by the unexpectedly positive Durable Goods Orders (Oct) growth.
• CURRENCY & FIXED INCOME: The 10-year US TREASURY YIELD fell 5.4 basis points to 4.248%, from 4.302% late Tuesday; while the 30-year yield fell 5 basis points to 4.4298% from 4.48% late Tuesday. The 2-year bond yield fell 3.1 basis points to 4.223%, from 4.254% on Tuesday night.
– The DOLLAR INDEX, which measures the greenback’s strength against a basket of other major world currencies including the Yen and Euro, fell 0.73% to 106.06. Against the Japanese Yen, the Dollar weakened 1.3% to 151.11 with the Yen touching its strongest level against the greenback in 5 weeks. The Euro was up 0.75% at USD 1.0565 while the Pound sterling gained 0.85% to USD 1.2675. After falling on Tuesday, the Mexican Peso bounced back to gain 0.3% against the USD, and the Canadian Dollar gained 0.21% against the greenback.
– The biggest cryptocurrency, BITCOIN, is trying to bounce back after dropping 4 days from its record high of USD 99,830. Its price last surged 5.34% at USD 96,544.00.
• COMMODITIES: OIL prices moved volatile between negative & positive territory after falling on Tuesday on confirmation of the ISRAEL – HIZBULLAH ceasefire following sharper weakness on Monday in anticipation of the deal. US WTI crude oil closed slipping 0.07% at USD 68.72/barrel, while BRENT ended at USD 72.83/barrel, up 0.03% on the day.
– In precious metals, spot GOLD rose 0.17% to USD 2,636.35/ounce.
• INDONESIA: Simultaneous regional head elections (PILKADA) were held for the first time in Indonesia on Wednesday (27/11/2024), held in 545 regions including 37 provinces, 415 regencies, and 93 cities. Data from the General Elections Commission (KPU) recorded that the permanent voter list in the 2024 elections was recorded at 203,657,354 voters. The financial market also took a day off yesterday after closing down 68.22pts / minus almost 1% on Tuesday to 7245.89 as investors look to secure portfolio gains ahead of the PILKADA and anticipate what happens in regional markets. As expected, capital outflows continued as foreigners net sold IDR 830.32bn on the day, bringing the last month’s heavy selling to IDR 15.78 trillion. RUPIAH exchange rate is still hot at 15,925/USD, NHKSI RESEARCH thinks it is unlikely to drop significantly especially towards the end of the year, if there is no sign that the Fed rate cut will run at a predictable pace. Today JCI should try to hold at MA10 / 7210 Support while trying to break MA20 / 7310 Resistance to launch window dressing plan towards conservative year end target of 7450-7500.
Company News
• UNVR: Here’s Unilever’s Interim Dividend Schedule of IDR 1.56 Trillion
• POWR: Cikarang Listrindo (POWR) Gets Approval to Release USD500 Million Notes
• DOID: DOID to Acquire Another Mine in Australia
Domestic & Global News
Luhut Bluntly Reveals 12% VAT in Early 2025 Potentially Postponed
Trump’s Import Tariff Threats Make China, Mexico, and Canada Wary
Download full report HERE.
