Today’s Outlook:
• Global stock indexes edged higher while US Treasury yields fell in Tuesday trading as markets digested data showing the US labor market remains tight, and the prospect of an interest rate cut after hearing comments from Federal Reserve Chairman Jerome Powell. The Fed needs more data before cutting interest rates to ensure recent weaker inflation readings truly reflect underlying price pressures, Powell said during a conference in Portugal on Tuesday. The Labor Department reported on Tuesday the results of the JOLTs JOB OPENINGS survey, a measure of labor demand, rose by 221,000 to 8.140 million on the last day of May, the lowest level since February 2021 and slightly above Wall Street expectations that hoped to see a figure below 8 million. Nevertheless, the yield on the benchmark 10-year US Treasury note fell 4.9 basis points to 4.43%. Portfolio managers interpreted Powell’s comments that it looks like he is preparing the ground for a rate cut possibly in September. The market currently sees a 64% chance of a rate cut in September, up from about 61% last week, according to Investing.com’s Fed Rate Monitor Tool. The POwell statement comes a day ahead of the release of the Fed’s June Minutes and more insight into the labor market will come from Friday’s Nonfarm Payrolls data. The global MSCI index rose 0.40% to 806.95. In Europe, the STOXX 600 index fell 0.42% as the sentiment of the first round of French legislative elections faded in relief. On Wall Street, all major indices ended up appreciating in a volatile session, supported by gains in Consumer, Financial, Communication Services sectors; while on the other hand Healthcare and Energy stocks were the biggest drags. The S&P500 perched above the 5500 level for the first time, and the NASDAQ Composite led the gains by 0.84% to above the 18000 level.
• ECONOMIC INDICATORS: Today it is the turn of employment data in the private sector, aka ADP NONFARM EMPLOYMENT CHANGE (June) which will be the center of attention of investors, where it is expected that there will be an increase in new hires by 7 thousand to 159 thousand, slightly higher than the previous month’s 152 thousand. The weekly INITIAL JOBLESS CLAIMS will be announced earlier than usual on Thursday in anticipation of the 4th of July holiday. Also following will be Composite & Services PMI data from S&P Global which will find out whether business activity in general and services in particular in the US is able to stay in expansionary territory, given that Factory Orders (May) data is predicted to weaken.
• COMMODITIES: Crude OIL prices fell as fears of supply disruptions caused by Hurricane Beryl faded. BRENT futures were down 0.42% at USD 86.24/barrel, while US WTI closed at USD 82.81/barrel, down 0.68%. GOLD spot prices edged down 0.07% to USD 2,330.03/ounce, while futures depreciated further slightly to USD 2,325.80/ounce.
• CURRENCY: The DOLLAR INDEX, which measures the greenback’s strength against a basket of other major world currencies including the Yen and Euro, fell 0.15% to 105.68. Against the Japanese Yen, the Dollar was 0.01% weaker at 161.44 after reaching 161.745 on Tuesday, its strongest position in almost 38 years, largely driven by the wide US-Japan interest rate gap.
• INDONESIA: Indonesia’s Manufacturing Purchasing Manager’s Index (PMI) in June 2024 corrected to 50.7, down 2.68% from 52.1 in May 2024. Despite the decline, Indonesia’s Manufacturing PMI still continued its expansionary trend for 34 consecutive months. Indonesia’s Manufacturing PMI is now lower than countries such as China & the US which are at 51.8 and 51.7 respectively, as well as from several ASEAN countries such as Vietnam & Thailand; which are at 54.7 and 51.7 respectively. S&P Global said the decline in Indonesia’s PMI was due to sluggish exports for four consecutive months. At the same time, the government is preparing a discourse to raise import duties of up to 200% on imported textile products from China in response to China’s dumping actions which are considered detrimental to the domestic industry. Economic observers emphasize the potential for blunders in the Minister of Trade’s plan because the imposition of Anti Dumping Import Duty (BMAD) that is too high on imported products is at risk of causing retaliation from the country of origin, especially when it turns out that Indonesia cannot prove the existence of dumping on imported products from China. . China could then turn around and impose high import duties on Indonesian export products.
• JCI seems to be pulling back a bit after experiencing an almost 2-week bull run, the longest bullish wave since it fell from a high of 7455 in mid-March. NHKSI RESEARCH considers this is a natural consolidation and may provide an opportunity to BUY ON WEAKNESS, especially around the Support area of psychological level 7000 up to 6950. Foreign funds re-entered IDR 488 billion (all markets) adding to the coffers of net foreign buying in July.
Company News
• LSIP: Salim Group Palm Oil Issuer (LSIP) Spread Dividends of IDR 265.97 Billion, Check the Schedule
• PTPP: PTPP Spends IDR 1.25 Trillion to Pay Bond and Sukuk Debt
• MAPI: Mitra Adiperkasa (MAPI) Dividend Schedule IDR 132.31 Billion, Liquid End of Month
Domestic & Global News
3 Months Ahead of Jokowi’s Resignation, Indonesia’s Debt Ratio Rises to 38.71%
Here’s Why China’s Surge in Plastic Stockpiles Could Put Global Markets in Turmoi
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