• The US stock market ended the second trading day of the year back in negative territory as profit-taking continued after a steep climb in 2023, while the release of the Federal Reserve’s December Minutes failed to answer the questions hanging over the market. It was the first time that the benchmark S&P500 index started the year with two consecutive declines since the eventful year of 2015 where the first 3 days of trading were bearish. It was also the largest two-day percentage decline since last October. The underlying sentiment was that investors turned to re-evaluate expectations of pivots this year and how soon they might be implemented. While the Fed is expected to hold rates in place at this January’s FOMC Meeting, traders have priced in a 67% chance of a 25 bps rate cut in March, according to the CME Group FedWatch survey. The Fed Meeting Minutes released yesterday also provided a new outlook where policymakers are increasingly confident that Inflation is under control, with the potential for Inflation to heat up again having been eliminated, but there are now concerns that this achievement comes at the cost of an economic slowdown due to overly tight monetary policy. The Fed has also not given any clues on when the first pivot will start.
• Speaking of economic data, the US published the ISM Manufacturing PMI (Dec.) which is still relatively in contractionary territory but has started to move in a more expansionary direction; while the JOLTs Job Openings proved there were fewer jobs in November than predicted and the previous month. Later tonight follows the second crucial employment data, which is the ADP Nonfarm Employment Change (Dec.), which is predicted to add 115k private sector workers compared to 103k jobs created in November. Weekly Initial Jobless Claims, US S&P Global Composite and Services PMI will also add to the list of important economic data to watch.
• EUROPEAN & ASIAN MARKETS: Germany released December Unemployment Rate at 5.9% as expected, a slight increase from November at 5.8%. From Asia today, Japan and China will showcase their December Manufacturing PMI & Services PMI data to see if Japan’s manufacturing sector is still struggling in contraction territory, while China’s services sector continues to strengthen its expansion. The same question also applies to the UK with regard to the scheduled release of the S&P Global UK Composite PMI (Dec.) data which is expected to expand further to a reading of 51.7 from the previous position of 50.7. Market participants will be closely monitoring the German Inflation announcement later tonight at around 20:00 GMT where German CPI is expected to accelerate back to 3.7% yoy in December, up from November.
• The Nikkei rose 28% in 2023, the biggest annual gain in a decade, closing last year just a step away (less than 1.0%) from the 33-year high hit in November. Tokyo markets are still closed due to a public holiday and will reopen on Thursday. Overall, other Asian stock markets continued their sell-off in Wednesday’s trading, while their currencies also mostly weakened against the US Dollar. MSCI’s broadest index of Asia-Pacific shares outside Japan fell nearly 1.5% after dropping 1.0% on Tuesday in a sluggish start to the year. The index rose 4.6% in 2023.
• COMMODITIES: OIL prices were pushed up after the American Petroleum Institute (API) released weekly US oil reserve stocks figures turned out to drop 7.4 million barrels, far more than expected by almost 3 million barrels, in sharp contrast to the previous week which was still a surplus of 1.8 million barrels. Later tonight at around 23:00 GMT, the US Crude Oil Inventories figure will be announced by the Energy Information Administration (EIA), which is expected to fall by another 3.2 million barrels, following the loss of 7.1 million barrels in the previous week.
• JCI is following the footsteps of regional market which seems to be getting more and more nervous at 7300 level after a pretty impressive year-end rally. Although still considered safe on its Uptrend path, there could still be further consolidation on JCI towards 7250-7240, up to 7190-7200 at the base of MA20. NHKSI RESEARCH advises investors/ traders to tighten the Trailing Stop level further at this point in time, while waiting for the right momentum to BUY ON WEAKNESS again.
• ADMR: Injecting IDR376 Billion into Subsidiary’s Capital
• META: Acquires Lau Gunung PLTM by IDR 45 billion
• VKTR: Build IDR180 Billion Facility
Domestic & Global News
• Minister of Industry Warns China to Improve Smelter Investment Governance in RI
• Saudi Arabia Officially Joins BRICS Bloc
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