• The Dow Jones Industrial Average slipped down 0.22% on the first trading day of October, paced by slump in energy and utilities as Treasury yields continued to march higher after the US averted a government shutdown (temporary for 45 days until Nov 17th) after the US Congress passed a last-minute budget bill before last Saturday’s deadline. However, the Nasdaq managed to gain 0.7% after Goldman Sachs added chipmakers to its list of preferred stocks. The Energy sector dropped 2% on concerns of rising supply and a higher dollar. Still, oil prices remained above USD 90/barrel, with some forecasting a boost in demand from China’s annual ‘Golden Week’ holiday. Treasury yields were pushed higher by growing expectations for another Federal Reserve interest rate hike. The 2-year US Treasury yield rose 5.2 points to 5.098%, while the 10-year Treasury yield rose 12 bps to 4.696%. Only about 30% of traders expect the Fed to lift rates next month, up from around 18% last week, according to Investing.com’s Fed Rate Monitor Tool. Fed Governor Michelle Bowman said she is ready to support further rate hikes if the pace of decline in US Inflation proves to be slowing. In terms of economic data: The US released the S&P Global US Manufacturing PMI (Sept.) which was close to expansionary territory (50) at 49.8, beating expectations and the previous month’s figure. Similarly, according to the ISM Manufacturing PMI, where the Sept. growth in US manufacturing activity accelerated to 49, much better than the forecast and previous period at around 47. Important economic data related to employment will begin to appear later Tuesday night around 21.00 WIB, namely JOLTs Job Openings where it is expected to be little changed from the previous month, indicating there may be around 8.83
million new job openings in August. One other market sentiment that will dominate is the 3rd quarter earnings reports coming out soon, where analysts expect corporate profits to increase 1.6% from the same quarter last year, after falling 2.8% in the second quarter of this year.
• ASIAN MARKETS: Japan has released a series of important economic data, which says that the Tankan Manufacturing Outlook Index experienced significant growth above expectations in the third quarter, especially for large manufacturers; although according to au Jibun Bank Japan Manufacturing PMI for September is still struggling in contractionary territory.
• EUROPEAN MARKETS: Speaking of Manufacturing PMI for September: Germany came in below estimates, Eurozone and UK were able to meet expectations; certainly all three are still struggling in contraction territory. As for the Eurozone, the August Unemployment Rate came in at 6.4% as expected, lower than July’s 6.5%.
• COMMODITIES: West Texas Intermediate or WTI (New York) and Brent (London) crude oil prices both dropped 2%, continuing Friday’s decline; on the premise that high energy prices will weigh on the global economy and push up Inflation, thus ultimately suppressing demand for Crude Oil itself. The price of the WTI contract for November delivery finally broke free from the key USD 90 level, closing at USD 88.82/barrel or slumping 2.2% intraday and even touched a 3-week low of USD 88.47. Meanwhile, Brent prices for the December contract, which is known to be the most active, fell 1.6% intraday to USD 90.71/barrel, although it had risen from a low of USD 90.36. OPEC+ will host a meeting of its 23 Oil producing members on Wednesday, where it seems unlikely that they will change the 1.3 million barrel/day production cut until the end of the year. At the same time, its implementation has other consequences. Asia’s crude oil imports slipped for a second consecutive month in September as refinery maintenance trimmed demand. Another factor weighing on non-US Oil consumers is the surge in the Dollar to a 10-month high on the basis that the upward trend in US interest rates is likely to continue.
• Last but not least, Indonesia published the Nikkei Manufacturing PMI which turned out to be a slightly slower growth to 52.3 in September, compared to 53.9 in August. The September Inflation rate cooled further to 2.28% yoy, from 3.27% in August; although the growth on a monthly basis actually heated up to 0.19% mom, compared to -0.02% deflation in the previous month. Core Inflation, which excludes the price of volatile items such as fuel and food, stabilized below Bank Indonesia’s safe level of 3%, also easing back to 2.0% yoy, lower than expectation & August’s 2.18%. Looking at yesterday’s JCI Closing position which is still hesitant to break the important MA10 & MA20 Resistance, NHKSI RESEARCH reminds investors/traders to hold Average Up until at least JCI is able to close steadily above 6970 (even better if it is able to re-enter the 7000s area).
• AMMN : Gold and Copper Production Decline in 1H23
• WIKA : Secured IDR19.98 Trillion in New Contracts as of August 2023
• BREN : Set IPO Price at IDR 780 Per Share
Domestic & Global News
• Beware of Year-End Inflation Spike in Food, Here’s What Entrepreneurs Say
• US Official: US Warned China to Expect Updated Export Curbs in October
Download full report HERE.