Today’s Outlook:
• Wall Street’s major indexes ended higher on Friday trading (07/26/24) on the back of buybacks in the Technology sector especially in large stocks that were hit by a sell-off at the beginning of last week, as well as the release of PCE PRICE INDEX Inflation data encouraging optimism that the Federal Reserve will soon start lowering interest rates. On Friday, the S&P 500 gained 1.11%, while the Nasdaq Composite rallied 1.03%, while the Dow Jones Industrial Average Index shot up 654.27 points, or 1.64%, back above the psychological 40,000 level. However, with these results, only the DJIA closed last week in positive territory and posted weekly gains for the fourth consecutive time, while for the S&P 500 and Nasdaq Composite, Friday’s gains were not enough to cover the declines that occurred in the previous 2 sessions, so both indices had to end last week in negative territory for the second consecutive week. The CBOE Volatility Index, which measures the “fear” index of the implied volatility of the S&P 500, fell 11.21% to 16.39.
• EARNINGS SEASON: 5 members of the “Magnificent Seven” recorded gains on Friday, led by Meta Platforms which rose 2.7%. The two exceptions were Tesla and Alphabet, where their lackluster earnings had triggered a massive sell-off on Wednesday. Both edged down 0.2%, with Alphabet plunging to its lowest Closing point since May 2. With the rest of the Magnificent Seven’s earnings reports due this week, the market’s further outlook may depend on the results released by Apple, Microsoft, Amazon, and Meta. Analysts think that sector rotation is happening now, to laggard sectors such as mid and small cap stocks which have gained momentum in recent weeks, with the Russell 2000 and S&P Small Cap 600 both rising to their highest closing levels for the fourth time in a week. The Russell 2000 has scored its third consecutive weekly gain in 2 months and its best 3-week win since August 2022. These economically sensitive small caps were supported by a modest rise in US prices in June, as indicated by Friday’s PCE PRICE INDEX data, which underscored cooling inflation and gave the Fed reason to start easing policy in September.
• ECONOMIC INDICATORS: The US Federal Reserve’s favorite inflation benchmark, the PCE PRICE INDEX data, rose 0.2% on a monthly basis in June and 2.6% on an annual basis, roughly in-line with expectations. Market calculated odds of a 25 bps cut at the Sept FOMC Meeting held steady at around 88% after the PCE price index reading, according to CME FedWatch monitoring. Traders are still largely optimistic of a second rate cut in December, as LSEG data shows. This rate cut optimism is also one of the reasons fueling buying in Tech stocks and lower US TREASURY yields. UNIVERSITY OF MICHIGAN noted that Inflation Expectations for the next 5 years rose 0.1% to 3.0%, but was accompanied by Consumer Expectations & Sentiment (Jul) which also increased going forward, although there tends to still be pessimism in the current conditions.
• ASIA MARKETS: JAPAN reported Tokyo Core CPI and CPI (Jul) which were both more or less in-line with expectations with annual growth of 2.2% each.
• COMMODITIES: OIL prices were poised to rise on Monday, trimming last week’s losses, on fears of widening conflict in the Middle East following a rocket attack on the Israeli-occupied Golan Heights, for which both Israel and the United States accused the Lebanese armed group Hezbollah of responsibility. BRENT futures rose 0.3%, to USD 81.33/barrel; while US WTI edged up 0.1%, to USD 77.25/barrel. Last week, Brent fell 1.8% while WTI fell 3.7% due to CHINA’s declining demand and emerging hopes of a Gaza War ceasefire deal. But recent developments say otherwise: on Sunday, Israel’s security cabinet authorized Prime Minister Benjamin Netanyahu’s government to decide on the “manner and timing” of the response to Saturday’s rocket attack on the Golan Heights that killed 12 teenagers and children. Iran-backed Hezbollah denied responsibility for the attack, which was the deadliest on Israel or an Israeli-annexed territory since an Oct. 7 attack by Palestinian militant group Hamas sparked the war in Gaza. Israel has vowed to retaliate against Hezbollah in Lebanon, and Israeli jets struck targets in southern Lebanon on Sunday.
• JCI finally bounced above the MA10 again supported by Foreign Net Buy worth IDR 366.69 billion placing Closing position above Support 7280 and opening the opportunity for strengthening at the beginning of this week towards Resistance around 7350, thanks to the positive sentiment of regional markets. However, NHKSI RESEARCH suggests cautious stock selection by firstly sticking to big caps index mover stocks.
Company News
• BFIN: BFIN’s Profit and Revenue Slumped
• ASLC: Famous Conglomerate Issuer’s Profit Jumped 509%, Shares Soared
• PGEO: Minimalist Growth, PGEO Recorded Profit of USD96.27 Million in the First Half of 2024
Domestic & Global News
Manufacturers Convinced China’s Ceramic Antidumping Plan Won’t Make Prices Soar
Goldman & Citigroup Predict Oil Prices to Fall to USD 75/Barrel If Trump is Elected
Download full report HERE.
