Today’s Outlook:
• US stocks ended the Christmas week on Friday (27/12/24) in negative territory, falling alongside the US Dollar to lower levels, giving in to profit-taking in a slowing & illiquid market ahead of the last weekend of the year. The sell-off in Wall Street’s major indices began to accelerate, cooling the year’s rather remarkable Santa Claus rally, triggered by the decline in the “MAGNIFICENT 7” stocks such as Tesla which slumped 4.9%, along with Amazon.com, Microsoft, and Nvidia. The S&P 500 slumped 1.11%, but still left a weekly gain of 0.67%. The Nasdaq Composite ended up plummeting 1.49%, after falling more than 2% during the session. The Dow Jones Industrial Average fell 0.77%. MSCI’s global stock index fell 0.59% on Friday, and gained 1.45% during the week. Chief market strategists expect there is still some limited upside potential for this bull market, which President Trump’s inauguration day will be a pivot point and all the good (prospective) news will be priced-in in the market. FEDERAL RESERVE Chairman Jerome Powell said earlier this month that US central bank officials “will be cautious in deciding on further rate cuts” after the 25bps rate cut as expected. The US economy is also facing the impact of DONALD TRUMP, who has proposed deregulation, tax cuts, tariff hikes, and stricter immigration policies that are seen by economists as pro-growth and inflation.
• ASIA & EUROPE MARKETS: MSCI’s broadest index of Asia Pacific shares outside Japan fell 0.1%, marking a weekly gain of 1.5%, while Tokyo’s Nikkei rose 1.8%. Europe’s Stoxx 600 rose 0.67% on Friday and is up around 1% for the week.
• CURRENCY: The DOLLAR INDEX, which measures the strength of the US DOLLAR against six other major world currencies, weakened 0.06%, marking a weekly gain of 0.2%, and suggesting a 6.6% rise through 2024. USD/JPY fell 0.06%, but was near a 5.5-month high on Tuesday. The greenback also shows a 5.4% gain this month against the Japanese YEN and a nearly 12% rise for 2024. EURO, on the other hand, is steady, not far from November’s two-year low and showing a 5.6% loss this year.
• – BANK OF JAPAN refrained from raising interest rates this month, sending the yen into a slump. Japan’s central bank governor Kazuo Ueda said he prefers to wait for clarity on Trump’s policies, underscoring growing anxiety among central banks around the world about US tariffs that have the potential to severely hit global trade. Furthermore, Tokyo Core CPI (Dec) proved to be still lower than expected despite having started to accelerate 0.2% from the previous month to an annualized level of 2.4%. Japan’s Industrial Production which is still slumping at negative growth of 2.3% mom in Nov is likely to keep the BOJ on a loose monetary policy, while market participants expect the EUROPEAN CENTRAL BANK to deliver further rate cuts; both of which are not positive for their respective currencies. Investors expect a 37 basis point cut in US interest rates by 2025 in May, while the ECB is expected to have cut its deposit rate by a full 100 bps to 2% as the EUROZONE economy slows.
• – Expectations of higher US interest rates pulled up the 10-year US TREASURY YIELD, to its highest level since early May on Thursday morning, at 4.641%. It was last up 4.6 basis points at 4.625%. Meanwhile, the 2-year US TREASURY yield, which tracks interest rate forecasts, fell 0.4 bps to 4.328%. The rising US debt trend also caused EUROZONE bond yields to rise, where the 10-year GERMAN bond yield rose 7.6 bp to 2.401% on Friday.
• COMMODITIES: OIL prices rose more than 1% on Friday and recorded a weekly gain in low trading volumes ahead of year-end, boosted by a largerthan-expected decline in US crude stockpiles last week. BRENT crude rose 91 cents, or 1.2%, to $74.17 a barrel. US WTI (US West Texas Intermediate) crude gained 98 cents, or 1.4%, to $70.60 per barrel. On a weekly basis, Brent crude and US WTI gained about 1.4%. US crude inventories fell by 4.2 million barrels in the week ended December 20 (versus the Reuters analyst consensus of a 1.9 million barrel decline and the American Petroleum Institute’s figure of 3.2 million barrels) allegedly because refineries increased activity and the holiday season boosted fuel demand, according to data from the US Energy Information Agency (EIA). Optimism over CHINA’s economic growth has also fueled hopes of higher demand next year from the world’s largest oil importer.
• – CATALYSTS FOR COMMODITIES: WORLD BANK on Thursday raised its forecast for CHINA’s economic growth in 2024 and 2025. Meanwhile, Chinese authorities have agreed to issue 3 trillion yuan ($411 billion) of special bonds next year, Reuters sources said, in an effort by Beijing to revive its flagging economy. EUROPEAN CONFLICT (RUSSIA – UKRAINE), appears to be back at the forefront after events this week that could affect supply next year. NATO said on Friday that it would increase its presence in the Baltic Sea, a day after Finland seized a ship carrying Russian oil on suspicion of causing internet and power line outages. Meanwhile, Dutch and British wholesale natural gas prices rose amid fading hopes for a new deal to transit Russian gas through Ukraine.
• – MIDDLE EAST CONFLICT began a new chapter after ISRAEL stormed a hospital in northern Gaza on Friday and struck targets linked to the Houthi militant movement in Yemen on Thursday, but commodity analysts expect these events may not affect oil prices much heading into next year. In the safe-haven commodity corner, GOLD prices actually fell 0.74% to $2,615.54 per ounce. Analysts argue that the biggest risk in the Middle East is from the US sanctions enforcement that is likely to happen under the next Donald Trump era.
• JCI in overall is still in a downtrend since falling from September peak at 7910, on Friday it moved back down below MA10 & MA20 by depreciating 29pts / -0.41% to 7036.6 level. This time Foreign Net Buy of IDR 199.54bn (RG market) was recorded, but could not erase their massive weekly and YTD net sell totals of IDR 1.68tn and IDR 28.72tn (RG market). Simply said, it’s almost dashed hope that NHKSI RESEARCH’s JCI YEAR END TARGET can perch at 7400 (which we have revised-down from 7800 initial target). USD/IDR which was helped by the rising Dollar Index sentiment, made the Rupiah exchange rate powerless to rise from its current rate of 16,235/USD. It is almost certain that JCI will end the year with a year-to-date decline of -3.25%. The performance of the Indonesian stock market is in contrast to the one year performance of the 10 year Treasury BONDS yield / ID10YT yield which was able to rally 8.11%. Closing the last day of trading in 2024, NHKSI RESEARCH only hopes that JCI is able to stay above the psychological level of 7000 as a foundation for the journey next year. Happy New Year 2025, Happy Trading & Investing!
Company News
• CCSI: Establishes Rp48M Cable Internet Provider Venture
• ADRO: ADRO Injects Business Entity USD4.1 Million
• CUAN: CUAN Entity Borrowed Rp2.42 Trillion from BNI
Domestic & Global News
Biodiesel B40 Runs on January 1, 2025, ESDM Minister Reviews Refinery Readiness
China’s Industrial Profit Contraction Rate Slows as Demand Remains Sluggish
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