Today’s Outlook:
• Global stocks rose and long-term US bond yields simultaneously fell on Monday (29/07/24) trading, at the start of a week that will be characterized by financial reports and three meetings of the world’s central banks, which could possibly make the United States and the United Kingdom open the door to interest rate cuts. Not to mention US labor data for July, plus closely watched surveys on US and global manufacturing, as well as Eurozone GDP and inflation data will also be released later this week. It’s understandable that market participants are nervous and seem to be holding back ahead of the performance reports of large Tech companies that are members of the “Magnificent Seven” and monitoring the next steps regarding interest rates from the Federal Reserve. S&P 500 companies which represent about 40% of the overall capital market value will report the 2nd quarter financial statements of Tech favorites such as Microsoft, Apple, Amazon.com, and Facebook’s parent, Meta Platforms; their performance results will be very influential in moving the market which is already very sensitive to anything outside expectations. Elsewhere, the US Treasury will outline its bond sale plans for this quarter, while China’s politburo meeting is expected to spawn more stimulus after last week’s surprise rate cut. After a tame June Inflation report, markets are betting that the Federal Reserve will have a more solid reason to decide on an interest rate cut in September, at the end of the FOMC MEETING next Wednesday. Surveys have fully priced in a 25bps easing and even factored in a 12% chance of a 50bps cut, and have also forecast another 68 bps cut in December.
• MSCI’s worldwide stock index edged up 1.03 points, or 0.13%, to 804.51. On WallStreet the stock indices were mixed, with the NASDAQ and S&P 500 being pushed up a little less than 0.1% by megacaps, while the Dow Jones ended down 0.12%. Later tonight investors will look forward to the CB CONSUMER CONFIDENCE (Jul) data as well as the first report of the US labor data series JOLTS JOB OPENINGS, where it is forecast that there will be an increase of 8.03 million job openings in June, compared to 8.14 million in the previous month.
• ASIA & EUROPE MARKETS: Today a lot of data will make investors focus their attention on the EUROPEAN continent: GERMAN GDP will be in the spotlight for Eurozone markets today where they expect the preliminary Q2 economic growth figure to come in at 0.1% qoq, slowing from the previous quarter’s 0.2%. Later in the afternoon, EUROZONE GDP will be monitored to see if it is able to reach 0.6% qoq in Q2 this year, up from 0.4% in the previous quarter. Finally, the GERMAN CPI figure will close the key European data tonight when the actual figure is compared to the 2.2% yoy estimate for July Inflation. Asian & European CENTRAL BANK MONITORING this week: BANK OF JAPAN will also meet on Wednesday, and the market is signaling a 70% chance that they will raise rates by 10 bps to 0.2%, with some scenarios they could decide by 15bps. In contrast, investors are less certain whether the BANK OF ENGLAND will ease monetary policy at Thursday’s meeting, with futures suggesting a 51% chance of a cut.
• CURRENCY & FIXED INCOME: The DOLLAR INDEX, which measures the greenback’s strength against a basket of other major world currencies including the Yen and Euro, was up 0.18% at 104.56. The benchmark 10-year US Treasury yield fell 3bps to 4.171%, the lowest in more than a week.
• COMMODITIES: GOLD slips as Dollar strengthens. Gold spot prices fell 0.08% to USD 2,383.64/ounce, and US gold futures closed down 0.1% at USD 2,377.80. In terms of other commodities, OIL prices fell in volatile trading; triggered by developments in the Gaza War where Israeli officials said they wanted to avoid an escalation of the Middle East conflict even after a rocket attack on the Israeli-occupied Golan Heights, for which Israel and the United States accused Lebanese armed group Hezbollah of responsibility. BRENT crude oil futures closed down 1.7% at USD 79.78/barrel; while US WTI ended 1.8% lower at USD 75.81/ barrel.
• INDONESIA finally released the latest Foreign Direct Investment figures which recorded a growth of 16.6% yoy, up from the last position of 15.5%. The data was unable to sustain the JCI’s gains at the beginning of yesterday’s trading session and made it close flat even though it was still supported by Foreign Net Buy of IDR 176.63 billion. JCI is prone to consolidation and still struggling in the Resistance 7345-7350 region without confirming a solid break out. Therefore, NHKSI RESEARCH still considers this period as high risk, especially when regional markets are also holding back to face the wave of important macroeconomic indicators this week. A WAIT & SEE ADVISE is most appropriate at this time, while not forgetting to place Trailing Stops on your portfolio positions.
Company News
• INCO: INCO’s Profit in the First Semester Declined by 82%
• PWON: Pakuwon’s Profit Decreased Due to Foreign Exchange Loss
• AUTO: Booked Profit Up 26.1 Percent to Reach IDR 1T in the Second Quarter
Domestic & Global News
Renewable Energy Project Investment in Indonesia Has Stagnated in the Last 7 Years
McDonald’s Sales Fall Globally for First Time in More Than Three Years
Download full report HERE.
