• The US stock market finally managed to close in positive territory after a volatile trading session on Tuesday (28/11/23), with the Nasdaq leading a mild gain of 0.29%, as investors digested divergent comments from several Federal Reserve officials; while economic data related to consumer behavior contributed positive sentiment. Fed Governor Christopher Waller stated that he increasingly believes the central bank’s current interest rate level is sufficient to keep Inflation down further towards the Fed’s target of 2%. US Treasury yields fell as a result of the statement, with the 2-year US Treasury yield falling nearly 12 basis points to around 4.74%, while the 10-year US Treasury yield fell 6 basis points to 4.330%. On the other hand, Fed Governor Michelle Bowman still suggested the need for further rate hikes to control the inflation rate. Market participants consider the contradictory opinions of Fed officials to be fairly normal when the Fed is nearing the end of a monetary policy cycle. Meanwhile, financial markets have also priced in an almost 100% chance that the next FOMC Meeting in December will leave the Fed Funds Rate at 5.25%-5.50%, as reported by the CME FedWatch survey. Even the odds of a 25bps cut occurring as soon as March 2024 were detected rose to almost 33%, from 21.5% earlier this week; although more majority of market participants expect the pivot to be more capable of being realized in May 2024. On the other hand, the holiday shopping season has arrived with more vigor, where a survey from the National Retail Federation predicts consumers will spend 5% more this year. These thoughts are in line with the Conference Board Consumer Confidence data for Nov released yesterday which was more optimistic than expected, after 3 consecutive months of declines. Later in the week, the Commerce Department will release its second estimate of Q3 GDP; along with the Personal Consumption Expenditure index, the Fed’s favorite gauge of Inflation, which will give us an idea of where monetary policy is headed.
• In other parts of the world, the MSCI global stock index also advanced northward although the Dollar Index fell to a 3.5-month low after mixed comments came from US central bank officials. GfK German Consumer Climate (Dec.) came in better than expected although still in pessimistic territory. The Bank of Japan released Core CPI at 3.0% yoy, lower than expected and the previous period at 3.4%. Speaking of Consumer Confidence, South Korea published a more pessimistic Consumer Confidence in November at 97.2 compared to 98.1 in the previous month.
• COMMODITIES: with the support from the weakening US Dollar, GOLD prices rose 1.4% to USD2040.82/ounce touching the highest level since May and posting 4 consecutive sessions of gains. Similarly, OIL prices received positive sentiment from the falling US Dollar as well as from the possibility that OPEC+ will extend the production cut and/or increase the size of the cut as a decision of their meeting on November 30th; plus there is a decrease in production due to storms in Kazakhstan. Also, the expected decline in US Oil inventories is expected to provide support to Crude Oil prices. Both global crude oil benchmark prices appreciated above 2% on Tuesday (28/11/23), putting WTI at USD76.41/barrel, and Brent at USD81.68/barrel. Traders see that the OPEC+ meeting will be quite tough to reach an agreement where Saudi Arabia has previously demanded OPEC+ member countries to reduce production. Although Kuwait has signaled to agree to this, it appears that it is not the case with some other countries.
• Yesterday’s JCI Closing at 7041.07 was the strongest since December 2022, a little closer to confirming the break of the 7050 key Resistance level which will pave the way for JCI to TARGET (end of year) 7130-7150. Technically, the nervous attitude in this Resistance area is fairly normal especially in a week full of economic data that will determine the direction of the capital market going forward. Therefore, the best ADVISE that can be given by NHKSI RESEARCH is to maintain a WAIT & SEE attitude while paying attention to market interest; Average Up if there are more solid bullish signs. Based on Foreign Net Buy data, it seems that foreign buying interest in Indonesian stocks has increased significantly since last week, making their current net buy position at IDR2.98 trillion (YTD).
• ASII : Bank Saqu Planned to Partner with AstraPay
• BREN : Recorded Profit of USD84 Million in 3Q23
• BSDE : Recorded IDR7.31 Trillion in Operating Revenues
Domestic & Global News
• Lackluster Exports, Customs and Excise Receipts Fall 13.6% in October 2023
• Economists Project Fed to Cut Interest Rates 175 Bps in 2024
Download full report HERE.