Today’s Outlook:
• The S&P500 and Nasdaq closed the first day of 2024 trading in negative territory, weighed down by the fall in Apple shares after Barclays downgraded the tech giant to “underweight” and the decline in other big Tech names driven by the rise in the US Treasury yield which briefly went above the psychological 4.0% level before closing down slightly to 3.937%. The movement in the US Treasury yield is believed to represent investors’ expectations regarding the projected cut in US interest rates this year; which in turn provided negative sentiment to Tech stocks that prefer a low interest rate environment. Several important economic data will be of interest this week are: The Fed’s December Meeting Minutes, and the employment report will complement the S&P Global US Manufacturing PMI (Dec.), which is still stuck in contraction territory. Likewise, the Eurozone & UK region where Manufacturing PMI (Dec.) is still fragile in contraction territory. Good news from CHINA: Caixin Manufacturing PMI (Dec.) strengthened further to 50.8, beating expectations & the previous period; while South Korea barely stayed on the expansionary border by slipping to 49.9. Later tonight at around 22:00 GMT, the ISM Manufacturing PMI (Dec.) and JOLTs Job Openings (Nov.) data from the US will be released, providing crucial data to see if the effect of the Fed’s tight monetary policy on the US economy can be considered as soft-landing and justify this year’s projected pivot.
• INDONESIA: Inflation (Dec.) successfully eased to 2.61% yoy, lower than the estimated 2.72% and the previous month’s 2.86%. Core Inflation was cooler at 1.80% yoy, lower than 1.85% forecast and November’s 1.87%. JCI responded by surging 50.8 points to 7323.6, a fresh new high in early 2024, one step away from reaching the ALL TIME HIGH area of 7355-7377 despite the shadow of RSI negative divergence. NHKSI RESEARCH advises investors/ traders to pay attention to market interest once the Target level is reached, in anticipation of a possible pullback consolidation.
• COMMODITIES: OIL prices closed on the red during the first day of trading in 2024 as expectations of interest rate cuts loom and fears of a Red Sea attack are erased. Brent oil closed 1.5% lower at USD 75.89/barrel, while US West Texas Intermediate shed 1.8% to USD 70.38/barrel. Prices fell as traders scaled back over-expectations of a US interest rate cut in 2024. A rate cut would indeed reduce consumer borrowing costs, ultimately boosting economic growth and global oil demand. The US Dollar also strengthened on Tuesday, while stock prices consolidated, further pressuring Oil prices lower. A stronger dollar makes Oil more expensive for non-US buyers. Oil prices had risen around USD 2 in previous trading, following an attack on a ship in the Red Sea by Houthi rebels at the weekend, and reports of an Iranian warship arrival on Monday. Thus, traders are evaluating the market situation, where there are no significant supply disruptions and it is unlikely that Iranian warships will be involved in clashes with American warships.
• Last Sunday, US helicopters repelled an attack by Houthi militants (backed by Iran) on a container ship operated by Maersk – Denmark in the Red Sea. On Monday, an Iranian warship entered the Red Sea, according to the semi-official Tasnim news agency. Shipping companies Maersk of Denmark and rival Hapag-Lloyd of Germany say their container ships will still avoid the Red Sea lane that gives access to the Suez Canal. A wider conflict could close sea lanes, which are crucial for oil transportation. A Reuters survey of economists and analysts expects Brent crude oil prices to average USD 82.56/barrel this year, up slightly from the 2023 average of USD 82.17/barrel, with weak global growth expected to limit demand; but on the other hand, geopolitical tensions could boost prices. In China, investor expectations of economic stimulus measures increased after manufacturing activity shrank in December for the third month. Any glimmer of stimulus could boost demand for oil and support crude prices. Separately, OPEC+ plans to hold a Joint Ministerial Monitoring Committee (JMMC) meeting in early February, although the exact date is yet to be decided.
Company News
• ERAA: Injecting IDR 266 Billion to Its Business Entity
• PGAS: Will Supply Gas Needs in OCBD Area
• ADRO: Injecting IDR136.17 Billion in Business Entity’s Capital
Domestic & Global News
• Sri Mulyani’s Reason for Levying 10% E-Cigarette Tax
• Russia Pounds Ukraine’s Two Biggest Cities in New Wave of Attacks
Download full report HERE.
