Today’s Outlook:

• US TREASURY and US DOLLAR yields fell while the DJIA recorded a record closing high on Friday (27/09/24) as a weak US inflation report maintained expectations of a large interest rate cut at the Federal Reserve’s upcoming policy meeting in November. The Dow Jones Industrial Average rose 137.89 points, or 0.33%, to 42,313.00, while the S&P 500 edged down 0.13% and the NASDAQ Composite lost 0.39%. All three major US stock indices posted gains for the third consecutive week. Global stock indices also hit record highs, helped by China’s stimulus push, and European stocks posted all-time closing highs. The Japanese yen strengthened against the US dollar after former Japanese Defense Minister Shigeru Ishiba appeared likely to become the next prime minister. MSCI’s index of worldwide stocks rose 2.15 points, or 0.25%, to 852.84 and hit a record intraday high. Europe’s STOXX 600 index closed at a record high, ending up 0.5% at 528.08.

• ECONOMIC INDICATORS: The PCE PRICE INDEX or personal consumption expenditures price index, a favorite inflation gauge of the Fed, rose 0.1% in August (as expected by economists) after an unrevised 0.2% increase in July. In the 12 months to August, the PCE price index rose 2.2% after 2.5% growth in July. With this expected downward trend in Inflation, the market fully expects a cut of at least 25 basis points at the November FOMC MEETING, with the odds of a larger 50 basis point cut now at 56.7%, according to the CME FedWatch Tool, from 49.9% previously. Other data showed US consumer spending increased slightly lower than expected in August.

• FIXED INCOME & CURRENCIES: The ongoing conflict in the Middle East, with continued Israeli attacks in Lebanon, also pushed US TREASURY prices higher in a flight-to-quality effort, as well as pressuring their yields, analysts said. The 10-year US Treasury yield fell 3.5 basis points to 3.754%, from 3.789% at the end of Thursday. Against the JAPAN YEN, the dollar weakened 1.82% to 142.17. The DOLLAR INDEX, which measures the greenback’s strength against a basket of currencies including the Yen and Euro, was down 0.17% at 100.43 after falling to 100.15, the lowest since July 20, 2023, with the Euro down 0.14% at USD 1.116.

• ASIAN MARKETS: Shares of CHINA’S US-listed companies surged on Beijing’s latest set of stimulus measures to boost the domestic economy. China’s blue chips jumped 4.5%, taking their weekly gain to 15.7%, the biggest gain since November 2008. Hong Kong’s Hang Seng Index also rose 3.6% and rocketed 13% for the week, its best performance since 1998. China’s central bank cut interest rates and injected liquidity into the banking system, and more fiscal measures are expected to be announced before the long holiday in the PRC that starts on October 1. From neighboring Sakura, Ishiba won the leadership contest of JAPAN’s ruling Democratic Liberal Party with a narrow victory. Ishiba has been a critic of monetary stimulus in the past and told Reuters the central bank was “on the right policy track” with interest rate hikes so far.

• COMMODITIES: ALUMUNIUM prices in London hit a 16-week high on buying spree triggered by the latest economic stimulus measures in the world’s largest metal consuming country, China. The 3-month Aluminum contract on the London Metal Exchange rose 0.4% to $2,623 per metric ton in officially opened trading after hitting $2,659, the highest since June 6. In other commodities, OIL prices rose on Friday but fell over the past week as traders weighed expectations of higher global supply on the back of China’s new stimulus. US WTI crude rose 51 cents to USD 68.18/barrel and BRENT edged up 38 cents to USD 71.98/barrel. GOLD spot price was down 1% at USD 2,643.88/ounce, heading for its best quarter in more than 8 years.

• JCI is still expected to consolidate towards Support 7520-7500 after failing to close last week at least back above the MA20 / 7750 platform up to MA10 / 7785 as the nearest Resistance, which has been supporting the JCI increase from early August. On weekly basis JCI was still able to post a slight gain of 0.08% but was hit by massive foreign net sell of -IDR 4.31T Net Sell (Regular Market). NHKSI RESEARCH advises investors/traders to carefully choose sector rotation that benefits from fundamental story, or better yet WAIT & SEE while waiting for JCI to land on solid Support to BUY ON WEAKNESS again.

Company News

• ASSA: IDR 577.6 Billion Capital Expenditure
• TOWR: A 10% Surplus, TOWR’s Profit in 1H24 Reached IDR 1.6 Trillion
• KMDS: Officially Acquired by Dima Group, Kurniamitra’s Chairman Resigns

Domestic & Global News
Economist Supports Government to Withdraw Debt Early to Finance Prabowo’s 2025 State Budget
India Opens Non-Basmati Rice Export Taps, Costing Only IDR 7,411 per Kilogram

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