Today’s Outlook:

• Global stocks fell on Thursday, weighed down by sluggish trading on Thursday (03/10/24) on major US and other major regional exchanges, while Oil prices surged, boosted by rising geopolitical tensions due to Middle East conflicts. Economic data released on Thursday showed an increase in US jobless claims, indicating a weak labor market; another report said US PMI service sector activity remained strong. The closely watched NONFARM PAYROLL (Sept) will be released this Friday. The Dow Jones Industrial Average fell 184 points or minus 0.44% to 42,011.59, the S&P 500 edged down 0.17%, and the NASDAQ Composite slipped 0.04%. The CBOE Volatility index, a gauge of Wall Street’s “fear” level, rose to 20.49, the highest closing point since September 6. European stocks closed down 0.93% as investors digested weak business activity survey data from the bloc. The MSCI global stock index fell 0.39% to 842.18. Asia-Pacific ex-Japan stocks earlier fell 1.3% overnight, largely driven by Hong Kong stocks which slumped after a strong rally; while some markets such as China and South Korea were closed for the National Day holiday.

• MARKET SENTIMENT:

– Weekly INITIAL JOBLESS CLAIMS rose to 225,000 in the week ended September 28, up from an upwardly revised figure of 219,000 last week, as indicated by the US Labor Department on Thursday. The figure was higher than economists’ anticipation of 222,000.

– The Institute for Supply Management (ISM) showed the US SERVICES PMI jumped to its highest level in 1.5 years in September, further evidence that the economy remained strong in the third quarter. While the Manufacturing sector is still struggling, Services are again supporting the economy going forward.

– Besides NONFARM PAYROLL (Sept) which is forecast to come out at 148k (up from 142k in Aug), Average Hourly Wage Growth (Sept) is also unlikely to be as high  as the previous month; eventually predicting Unemployment Rate (Sept) to remain at 4.2%.

• ASIA & EUROPEAN MARKETS:

– Japan’s Nikkei ended up almost 2% after newly elected Prime Minister, Shigeru Ishiba, said it is not the time to raise interest rates after meeting with Bank of Japan Governor Kazuo Ueda.

– Talking about Services PMI, GERMANY, EUROZONE, UK were still fairly expansive in Sept, although the trend showed declining growth compared to the previous month.

• MIDDLE EAST CONFLICT: Israel bombed Beirut – Lebanon on Thursday morning after a year-long clash with Iran-backed Hezbollah. US President Joe Biden may consider whether to support Israel attacking Iranian oil facilities.

• COMMODITIES: BRENT crude OIL futures closed surging up 5.03% at USD 77.62/barrel, while US WTI closed skyrocketing 5.15% to USD 73.71. GOLD prices were flat as the US DOLLAR strengthened against other major currencies. Spot Gold prices fell 0.01% to USD 2,657.24/ounce, while its futures closed 0.4% higher at USD 2,679.2. Workers’ strikes on the East and Gulf coasts entered their third day. Morgan Stanley economists said that a prolonged production stoppage could raise consumer prices, with food prices likely to react first.

• CURRENCY & FIXED INCOME:

– The US DOLLAR INDEX (DXY) rose to a 6-week high, reaching 102.09, the highest since August 19th. EURO was slightly down at USD 1.1026, and not far from Wednesday’s low of USD 1.10325, a level last seen on September 12. POUNDSTERLING weakened 1.1% to USD 1.3122 after Bank of England Governor Andrew Bailey told the Guardian newspaper that the central bank could become “a little more aggressive” in cutting interest rates if inflation continues to ease. Against the Japanese YEN, the Dollar strengthened 0.1% to 146.61.

– US TREASURY YIELD rose after the release of jobless claims data and service sector report. The 2-year US Treasury yield was last up at 3.7095% on Thursday, while the 10-year benchmark bond yield was last up at 3.853%. The market implies a 35% chance that the Fed will cut rates by another 50 basis points in November, down compared to nearly 50% last week according to CME FedWatch, and has forecast around a total of 70 basis points of easing until the end of the year. Portfolio managers think the market is still positive for the long term although investors will choose to be cautious for the short term given some uncertainty factors related to the US ELECTION and the turbulent Middle East Conflict.

• JCI is struggling to stay above the critical level of 7500 after the past few days of testing the Support of this medium term uptrend. Failure to hold above 7500 will take JCI out of the Channel pattern as well as break below MA50, opening potential for further consolidation towards downside targets around 7050-7000 (= round numbers also act as psychological Support). NHKSI RESEARCH still advises investors & traders to maintain a WAIT & SEE attitude at the end of this week, due to the high uncertainty factors lurking: US NONFARM PAYROLL data, Middle East Conflict escalation over the weekend, and still heavy foreign selling (yesterday observed Foreign Net Sell of IDR 916.5bn in RG market; almost exhausting their YTD net buy position which now only remains IDR 216.6bn). This eventually resulted in the sluggishness of the RUPIAH exchange rate back to the 15415 level and is expected to soon head towards IDR 15560 / USD as there is a MA50 as the closest target. Capital outflows are expected to be partly anchored to Chinese property bonds, where global institutional investors are betting on an improvement in the sector’s prospects as the government attempts to accelerate economic growth and control the mounting debt crisis.

Company News

• EXCL & LINK: First Media Officially Joins XL Axiata, Here are the Details
• HRUM: Harum Energy Entities Sign IDR 1.43 Trillion Transaction, Examine the Details
• MEDC: Medco to Distribute Interim Dividend Next Month

Domestic & Global News
Revealed Why Apple Canceled to Build Factory in Indonesia
Israel calls for evacuations from south Lebanon and strikes Beirut suburb

Download full report HERE.