Today’s Outlook:
• The Dow Jones Industrial Average on Monday staged a major comeback, recovering steep losses from earlier in the session after President Donald Trump said tariffs against Mexico would be paused for one month. The 30-stock average ended the day down 122.75 points, or 0.28%, to close at 44,421.91. At its lows of the day, the Dow was down 665.6 points, or 1.5%. The S&P 500 slid 0.76% to 5,994.57, and the Nasdaq Composite slumped 1.2% to 19,391.96. Stocks initially dropped Monday after Trump hit Canada and Mexico with a 25% levy on imported goods over the weekend. The U.S. also issued a 10% tariff on Chinese goods. The news sparked a major global sell-off, with equities in the U.S. and abroad tumbling. But a post from Mexico’s President Claudia Sheinbaum following a conversation with Trump appeared to calm investors. Trump later confirmed the temporary deal on Truth Social. “It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States,” he wrote, adding that negotiations for a more permanent deal would continue for the month. The pausing of the tariffs on Mexico reinforced the bullish view of some investors that tariffs for all countries could be Trump’s negotiating tool and that investors shouldn’t overreact initially.
• MARKET SENTIMENT: US will publish is December JOLTS Jobs Opening which has been forecasted to be 7.88 mn. Aside from that equities and bond markets will be reacting mixed to the pause in Trump’s tariffs. Its mixed reactions because while Canada and Mexico’s tariffs were paused, China’s tariffs of 10% were not paused as well. This will become a continued dampener to any rallies in Asia.
• FIXED INCOME & CURRENCIES: The dollar index was lower on Monday after U.S. President Donald Trump paused new tariffs on Mexico for one month, after the country agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal drugs, Trump said. Mexico and the U.S. will use the month-long suspension to engage in further negotiations, Trump said. The U.S. dollar was at 7.3254 yuan in the offshore market , having earlier pushed to a record high of 7.3765 yuan. Markets in China remain closed for the Lunar New Year and will resume trading on Wednesday. U.S. Treasury yields were mixed on Monday as investors weighed U.S. President Donald Trump’s new tariffs on goods from key trade partners and their effect on the economy. The 10-year Treasury yield was down 3 basis points at 4.535%, while the 2-year Treasury yield was up 2 basis points at 4.255%. One basis point is equal to 0.01%, and yields and prices move in opposite directions.
• EUROPEAN MARKETS: The pan-European Stoxx 600 ended the session 0.93% lower, recovering from lows of 1.6% earlier in the day. European markets traded lower on Monday after U.S. President Donald Trump imposed trade tariffs on several countries and threatened to do the same with the European Union and U.K. The Stoxx 600 autos index also pared declines and closed down 2.4%, after Mexico’s President Claudia Sheinbaum said that the U.S. has agreed to delay the implementation of President Donald Trump’s tariffs for one month. Shares of Volkswagen ended the day down by 4.1%.
• ASIAN MARKETS: Asia-Pacific markets traded lower Monday after U.S. President Donald Trump levied tariffs on Canada, Mexico and China over the weekend. Australia’s S&P/ASX 200 fell 1.79% to close at 8,379.4. Japan’s Nikkei 225 fell 2.66% to close at 38,520.90, while the Topix lost 2.45% to end at 2,720.39. South Korea’s Kospi dropped 2.52% to end the trading day at 2,453.95 and the small-cap Kosdaq traded 3.36% lower to close at 703.8. Hong Kong’s Hang Seng Index fell 0.3% in its last hour of trade. India’s Nifty 50 fell 0.56%, while the Sensex lost 0.5%. India’s Union Budget over the weekend offered a huge income tax relief to the country’s middle class. The Indian government also pledged to reduce its fiscal deficit to 4.4% of its GDP for the year beginning April 1, a decrease from a revised 4.8% for the current year, amongst other measures. Chinese markets remain closed for the Lunar New Year holiday.
– Japan’s yen was resilient, with the dollar sliding 0.24% against the yen to 154.845.
• COMMODITIES: – OIL prices edged up in volatile trade on Monday but closed at a one-month low on the expiration of a higher-priced contract, as the market digested U.S. President Donald Trump’s planned imposition of tariffs on Canada, Mexico and China. Concerns over imports from two of the main crude suppliers to the U.S. boosted prices by over $1 a barrel earlier in the session before Trump paused the new tariffs on Mexico for one month as Mexico agreed to reinforce its northern border to stem the flow of illegal drugs, particularly fentanyl. Brent crude futures for April delivery rose 29 cents, or 0.4%, from where that contract closed on Friday to settle at $75.96 a barrel, while U.S. West Texas Intermediate crude futures (WTI) rose 63 cents, or 0.9%, to settle at $73.16. That was the lowest close for Brent since Jan. 2 now that the lower-priced April contract is the front-month after the expiration of the higher-priced March future on Friday. Gold prices hit an all-time high on Monday, bolstered by safe-haven inflows after U.S. President Donald Trump’s tariffs on Canada, China and Mexico added to concerns of inflation that would dent economic growth. Spot gold rose 0.8% to $2,818.99 per ounce, after hitting a record of $2,830.49 earlier in the session. U.S. gold futures settled 0.8% higher at $2,857.10. Despite the usual dampening effect of a strong dollar on the gold market, prices have been rallying due to the safe-haven demand driven by uncertainty surrounding Trump’s tariffs, said David Meger, director of metals trading at High Ridge Futures. The 25% tariffs imposed by Trump on Canadian and Mexican imports from Tuesday, along with a 10% charge on Chinese goods, fuelled fears of a trade war that could slow global growth and feed inflation.
• JCI recovered from below 7000 and formed a hammer candle pattern. The index barely scraped to 7030 by the closing bell. While this signals a short-term rebound in the major downtrend channel pattern, it is not guaranteed for an immediate swing as net foreign outflow has been significant in the wake of a global trade war. Monday suffered a significant hit from Net Foreign Sell in the regular markets of IDR 274.79 bn. For the long-term, NHKSI RESEARCH views an incoming rally as RSI forms a positive divergence. NHKSI RESEARCH advises traders to maintain a WAIT & SEE attitude at the end of this week while waiting for important US Inflation data PCE PRICE index which will critically determine the global monetary policy map.
Company News
• ERAA: Commissioner and Three Directors of ERAA Resigned
• HRTA: Hartadinata Abadi Postpones the Issuance of Sustainable Bonds 2025
• LINK & WIFI: Link Net Spurs Revenue from ISP Partners, Including Hashim Djojohadikusumo’s Issuer
Domestic & Global News
Banggar DPR Criticizes Government’s Ban on 3 Kg LPG Gas Sales at Retailers
Donald Trump Signs Executive Order Establishing a US Sovereign Wealth Fund
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