Today’s Outlook:

• The S&P 500 and Nasdaq closed in positive territory in a highly volatile session on Monday amid weak PMI data according to the INSTITUTE OF SUPPLY MANAGEMENT (ISM) – although on the other hand the S&P GLOBAL US MANUFACTURING PMI in May actually strengthened in expansionary territory – and due to a glitch on the NYSE causing trading halts in many equities. The Dow Jones Industrial Average fell 115.29 points, or 0.30%, to 38,571.03, while the S&P 500 gained 5.89 points, or 0.11%, to 5,283.40 and the Nasdaq Composite gained 93.66 points, or 0.56%, to 16,828.67. A glitch in the New York Stock Exchange system has triggered highly volatile price movements in Berkshire Hathaway and Barrick Gold shares. Trading of at least 60 stocks listed on the NYSE was suspended, before the exchange fixed the technical problem and activity normalized as usual. In Monday’s trading session (03/06/24), Technology sector stocks posted the best performance, while the Energy sector was the biggest laggard. Energy stocks fell by more than 2% and therefore put pressure on the market in general following the slump in Oil prices triggered by OPEC+’s decision to agree to extend production curbs until 2025, but they also said that they would start phasing out some voluntary cuts after the third quarter. Plans to ease production curbs going forward are fueling fears of a supply surplus at a time when the market is questioning the strength of crude oil demand. Macquarie cautioned that the phase-out indicates that the extreme market support from OPEC+ (especially Saudi Arabia) may not last forever and is likely to bring price concerns in 2025.
• ECONOMIC INDICATORS: Markets weighed data that showed US manufacturing activity had slowed for a second straight month when it unexpectedly fell more than expected in May, raising fears of weakening economic growth. Investors see a 59% probability that the Fed will start cutting interest rates in September, up from about 53% before the ISM Manufacturing PMI data was released, as reported by the CME FedWatch Tool. The 10-year US TREASURY YIELD fell to its lowest level in two weeks following lackluster manufacturing data. This week’s focus will be on a slew of employment data starting today (later tonight at 9pm GMT) in the form of JOLTs JOB OPENINGS which forecasts job openings of 8.4 million in April, slightly down on the previous month’s 8.488 million. May’s NONFARM PAYROLLS data, due later this week, is the culmination point which will provide more cues on the labor market – another important consideration for the Fed in cutting interest rates. The US central bank will hold its FOMC MEETING next week and is expected to hold interest rates steady.
• ASIA & EUROPE MARKETS: Focus on Manufacturing PMI is also happening in Asia, especially SOUTH KOREA, JAPAN, and CHINA, as well as INDONESIA; where they all managed to maintain manufacturing sector growth in the expansionary realm. Meanwhile in continental Europe, at least GERMANY & EUROZONE are still unable to cross into expansionary territory (above the 50 level) although there seems to be growth; while the UK is the first to push their S&P Global UK Manufacturing PMI into expansionary territory at 51.2, quite in-line with expectations. As for this morning, South Korea has announced its CPI (May) rate which slipped to 2.7% yoy, from 2.9% in the previous period. Speaking of CPI, Indonesia reported no inflation in May, instead there was deflation on a monthly basis. CPI in May actually deflated 0.03% mom (the first deflation since August 2023), lower than the Bloomberg inflation consensus of 0.07%; moreover from April which recorded inflation of 0.25%. On yearly basis, May 2024 inflation rate was recorded at 2.84% yoy, below April which was 3% yoy; also below Bloomberg consensus of 2.97%. On the same occasion, the Head of BPS announced that Indonesia is expected to still be in the rice harvest period in May. The benchmark and retail price relaxation policy imposed in April is still valid until May 31 for several commodities such as sugar, corn, chicken meat, chicken eggs, and rice.
• COMMODITIES: Throughout May, GOLD prices on the LME market rose 0.62% to reach USD 2351/troy ounce. Meanwhile, OIL prices fell sharply on Monday to a 4-month low, as the decision by OPEC and its allies to extend production cuts until 2025, but also phase out the cuts starting later this year sparked concerns about a supply surplus amid sluggish global demand. US WTI futures plunged 3.6% to USD 74.22/ barrel, while BRENT futures expiring in August dropped 3.4% to USD 78.36/barrel. The Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, decided to extend production cuts of about 5.86 million barrels per day until 2025; divided into a cut of 3.6 million barrels per day until the end of 2025 and a voluntary reduction of 2.2 million barrels per day that will be extended for 3 months until the end of September this year. These voluntary cuts will then be phased out from October to September 2025. This is what traders fear will again lead to excess supply amid a sluggish world economy and global demand for energy. In contrast, other commodity analysts think that this OPEC+ move will not necessarily make Oil prices bearish because after all OPEC+ still has full flexibility regarding the policies it sets. Signs of weakening global demand have weighed on Oil prices in recent months, with a focus on US fuel consumption data. The US government will release oil stock and demand estimates on Wednesday, which will show how much gasoline was consumed around Memorial Day weekend, the start of the driving season in the US.
• MIDDLE EAST CONFLICT: An assistant to the Israeli prime minister confirmed on Sunday that Israel has accepted a framework agreement to ease the Gaza war, despite what Israelis called a “flawed” deal.
• JCI rebounded 65.5 pts or almost 1% higher on Monday, bouncing off the lower channel support area, aided by the Finance sector and other bluechips, keeping the psychological 7000 level safe for now. The real challenge will be at the 7150-7200 level where a number of Moving Average Resistance lies. NHKSI RESEARCH reminded that yesterday’s strengthening has not yet shown foreign interest in re-entering the Indonesian market, as foreigners still recorded a Net Sell of IDR 243.42 billion in yesterday’s trading (all markets).

Company News

• HRUM: Harum Energy’s (HRUM) March 2024 Profit Plunged 99 Percent, with USD 987 Thousand Remaining
• INDY: 65 Percent Drop, Indika (INDY) March 2024 Profit Remains USD 20.11 Million
• CUAN: Profit Soared 381 Percent, March 2024

Domestic & Global News
Indonesia Experiences Deflation in May 2024, Retailers: People Restrain Shopping
China Warns EU Ahead of Electric Vehicle Import Tariff Decision

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