Today’s Outlook:
• The Dow Jones Industrial Average jumped 0.4%/116 points on Thursday (28/09/23) as investors bought on weakness in Technology stocks (causing the Nasdaq to lead all three major US indexes with a 0.8% gain), while the rally in US Treasury yields stalled ahead of important Inflation data due this Friday. Investors are also monitoring progress in the capital Washington on whether policymakers will be able to avert a US government shutdown.
• The recent move of Treasury yields to a 16-year high has cast a shadow over the stock market, which has retreated after the Federal Reserve last week signaled a hawkish long-term interest rate outlook. The benchmark 10-year Treasury yield stopping at around 4.6% was perceived as a “relief” for stock portfolio managers after 3-4 days of market pressure. The S&P500 has slumped 6% since the end of July, but still pocketed a 12% gain for the year to 2023.
• Data showed that the US economy maintained a fairly solid pace of growth in the second quarter. Initial Jobless Claims rose slightly last week; while Existing Home Sales in August fell deeper than expected. Investors will monitor the Personal Consumption Expenditures (PCE) price index as the latest input on the Inflation trend in the US. The PCE price index is the most awaited important economic data for market participants, as they anticipate the tendency of Inflation signs to heat up again.
• Oil prices have been hit by steep profit-taking in the last 2 months, after Crude futures rallied more than 30% since late May. New York-traded WTI oil and London based Brent fell from the USD95/barrel price, which was a 13-month high for WTI, and 10-month high for Brent. Analysts estimate that the possibility of a correction taking place is as great as the chance of the oil price rally continuing until the end of the year. Oil prices that are one step away from touching USD100/barrel do seem overbought and ready to pullback at any time; the risk of a decline is open if there is massive selling in the bond market. The current WTI Oil price for November delivery is at USD91.71/barrel, down 2.1% intraday after touching USD95.04, the highest point since August 2022. Even last Wednesday, the US crude benchmark had jumped 3.7%. Meanwhile, Brent Oil prices for December delivery were at USD93.1/ barrel, down 1.3% intraday; after rising 2.1% on Wednesday. WTI started the climb from last May’s low, since prices were below USD64 and Brent below USD72; thus they have bagged gains of USD25 and USD30 respectively. The rally is mainly market participants’ response to Saudi Arabia & Russia’s production cuts; albeit tacitly supported by US oil producers who are ready to hold production at any time in order to maximize profits.
• Gold prices fell to a 7-month low on Thursday as traders pushed the price of the precious metal towards USD1850/ounce, after breaking the USD1900 Support in the previous trading session. The New York Comex gold futures contract for December was quoted at USD1878.6/ounce, down 0.6% (after hitting a low of USD1874.55; the lowest point since last March). Comex Gold has lost 2% in 48 hours, erasing the previous 5 weeks of gains since mid-August. Meanwhile, Gold spot price is at USD1866.97, down 0.4% (after hitting a low of USD1857.74/ounce; also the lowest point since last March). It is known that the skyrocketing bond market has wiped out hopes of a rebound in Gold prices. The 10-year US Treasury yield, skyrocketed to a 16-year high in Thursday’s trading session, on expectations of a continued upward trend in Fed interest rates. Massive bond market selling continues even though the US Dollar has pulled back from November highs.
• EUROPEAN MARKETS: The UK will report GDP for the second quarter of 2023 today, while Germany awaits data on Retail Sales (Aug.), German Unemployment Rate (Sept.). Eurozone will also be up next, with equally important economic data, namely CPI & Core CPI changes (Sept.).
• ASIA MARKETS: This morning, Japan has released Tokyo Core CPI (Sept.) which fell to 2.5% yoy; Unemployment Rate rose slightly in August to 2.7%, Industrial Production (Aug.) was flat at 0.0%, though better than expected at minus 0.8%; while Retail Sales (Aug.) rose above expectations to 7.0% yoy, unchanged from the previous month’s position.
• JCI, before the national holiday in commemoration of the Prophet’s birthday, managed to close Wednesday’s trading with a technical rebound at the Support lower channel; although it still seems hesitant to break the two-tier Moving Average Resistance right at yesterday’s high point of 6970. With a candle shaped like an Inverted Hammer, it is reasonable to expect the strengthening to continue today; especially since the three Dow Jones indexes also confirmed it with a technical rebound in their Support area. NHKSI RESEARCH advises investors/traders to pay attention to the important level of 6970; which if it is able to be broken (Closing position) then it is just a signal for more Average Up, from the current Speculative Buy position.
Company News
• HRUM : HRUM: Finalizing Acquisition of Nickel Smelter Owner
• PTPP : Increase Subsidiary’s Capital IDR98.58 Billion
• MTEL : Acquisition Dozens of Towers Owned by EXCL
Domestic & Global News
• Coordinating Minister Airlangga Unveils Government’s Strategy to Boost Exports
• Toyota Global to Build Third Plant in India
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