Today’s Outlook:
• The NASDAQ surpassed the 17,000 mark for the first time on Tuesday (28/05/24), boosted by gains in NVIDIA shares and optimism around AI; while the S&P500 closed slightly higher but the Dow Jones Industrial Average ended lower as US Treasury yields rose to their highest level in weeks after a lackluster bond auction. Nvidia surged 7% making the tech giant’s market value surpass USD 2.5 trillion since the release of its quarterly results, supporting the positive sentiment of other chip stocks (semiconductor index appreciated 1.9%) as traders returned to the market from the long weekend. Investors are looking forward to this week’s US Inflation data which could influence the Fed’s rate cut expectations. The US Personal Consumption Expenditures (PCE) price index report for April which is the Fed’s favorite inflation barometer is expected to remain stable on a monthly basis. Wall Street has been hitting new records lately as investors bet the US central bank will initiate an interest rate cut this year. Expectations as to when this pivot will occur are still uncertain, compounded by policymakers who are still wary of economic data still reflecting the trend of high inflation. Even Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, gave the most hawkish statement on Tuesday that the US central bank’s policy stance is still restrictive, adding that central bank officials have not completely ruled out the possibility of further interest rate hikes. The chance of a 25 basis point rate cut of above 50% is only available for November and December this year, as reported by the CME FedWatch Tool. The probability of a rate cut in September has reduced to around 43.6%, deflating from over 50% last week. Inevitably this sentiment all made US TREASURY YIELD soar again along with expectations that there is still a long way to go for the Fed to start cutting interest rates, while the latest economic indicators also point to indications of strengthening purchasing power. The US Consumer Confidence Index unexpectedly rose to 102 in May, strengthening above expectations & the previous month; thus inferring consumer strength will support the overall US economy.
• ASIA & EUROPE MARKETS: JAPAN reported BoJ Core CPI at 1.8%, lower than expected 2.2%; thus allowing the Bank of Japan to hold off on raising interest rates again. However, if their Household Confidence in May proves to be able to climb to 39.1 as predicted, it means that households are more optimistic than the previous 38.3. The same Consumer Climate will also be assessed by GERMANY, based on the GfK German Consumer Climate for June, whether the outlook for the future can be slightly more optimistic than the situation that actually still feels quite gloomy. Later in the evening, the more important data GERMAN CPI (May) will release their preliminary estimates and expect German Inflation in May to heat up slightly to 2.4% yoy from 2.2% in the previous period; although on a monthly basis it may be detected to have slipped 0.2% mom from 0.5% in April.
• COMMODITIES: GOLD prices continued to surge beyond records in May, on the back of strong demand dominated by Asia. In the past 3 months, gold futures prices for June delivery have increased by about USD 300, moving from USD 2,052 to the current USD 2,360. On Tuesday, gold futures gained 1.10% to USD 2,360/ounce, while spot gold was up 0.32% at USD 2,357. CHINA’S central bank is responsible for at least 30% – 50% of all global gold purchases made by their monetary authority in the last 2 years. Their reason for doing so is to reduce dependence on the US Dollar and potential economic sanctions. Major Swiss financial institution, Julius Baer, estimates the upside target for gold prices in the next 3 and 12 months to be USD 2,450 and USD 2,550 per ounce respectively. COMMODITIES: GOLD prices continued to surge beyond records in May, on the back of strong demand dominated by Asia. In the past 3 months, gold futures prices for June delivery have increased by about USD 300, moving from USD 2,052 to the current USD 2,360. On Tuesday, gold futures gained 1.10% to USD 2,360/ounce, while spot gold was up 0.32% at USD 2,357. CHINA’S central bank is responsible for at least 30% – 50% of all global gold purchases made by their monetary authority in the last 2 years. Their reason for doing so is to reduce dependence on the US Dollar and potential economic sanctions. Major Swiss financial institution, Julius Baer, estimates the upside target for gold prices in the next 3 and 12 months to be USD 2,450 and USD 2,550 per ounce respectively.
• UBS analysts are quite optimistic about the bullish trend of commodity prices such as gold, oil, and COPPER this year. Copper prices may be consolidating at the moment after hitting record highs, but positive fundamentals related to limited supply are still expected to boost prices to USD 11,500/metric ton by the end of the year, and USD 12,000/mt and above by mid-2025. In addition, China’s efforts to launch new stimulus policies to stabilize their property sector will further support investor interest.
• JCI crawled back above MA50 resistance, with a chance for further strengthening today towards 7300-7400. NHKSI RESEARCH suggests adding positions in bluechip stocks at support prices that receive positive sentiment (news-driven).
Company News
• BBRI: Distributed IDR59.96 T KUR until April 2024
• MEDC: Complete Area 47 Divestment in Libya
• WIIM Performance Weakened in the First Quarter of 2024
Domestic & Global News
Indonesia Seeks Semiconductor Business, Airlangga Says OECD Interested to Help
China Fends off American ‘Attack’ on Semiconductor Industry, Spends IDR 763 Trillion
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