Today’s Outlook:
• The US equity market started September by recording its largest daily percentage decline since early August. The DJIA slumped 626.15 points, or 1.51%, to 40,936.93, the S&P 500 shed 119.47 points, or 2.12%, to 5,528.93, and the NASDAQ Composite collapsed 577.33 points, or 3.26%, to 17,136.30. The CBOE Volatility Index, Wall Street’s “fear” gauge that measures market expectations of stock market turmoil, jumped 33.2% to 20.72, the largest daily percentage gain and highest close since early August. 9 of the 11 S&P 500 sectors fell, led by declines in the Technology sector as NVIDIA shares plunged nearly 10%, losing USD 279 billion from its market capitalization, which ended at USD 2.65 trillion. It was the largest daily drop in market value ever for a company in the US. The sell-off came ahead of after-market news that Nvidia had been subpoenaed by the US Department of Justice, which is seeking evidence that the chipmaker and other companies violated antitrust laws. The summons marks an acceleration of the investigation into Nvidia’s AI chip market dominance. The Justice Department had previously launched two separate investigations into the chipmaker amid antitrust concerns related to the company’s AI business dealings. As a result, NVIDIA’s fall has also dragged down the Magnificent Seven big names, which led this year’s Tech stock rally; including: AMD, Intel, Broadcom also suffered heavy losses on Tuesday trading (03/09/24). Also not spared from heavy selling: Alphabet fell 3.6%, Apple dropped 2.7%, and Microsoft depreciated down 1.8%. The Philadelphia SE Semiconductor Index lost 7.8%.
• MARKET SENTIMENT: Market sentiment also weakened as the Institute for Supply Management (ISM) explained US manufacturing data remained sluggish in contraction territory for August despite a slight improvement from July’s 8-month low. US Construction Spending (Jul) also contracted worse than expected. Furthermore, September is widely regarded as one of the worst months for stock market performance based on available data since the 1950s. Market participants await several labor market reports ahead of the Nonfarm Payrolls data for August due later on Friday. The September 17-18 FOMC MEETING will be closely watched after Fed Chairman Jerome Powell recently endorsed easing monetary policy. The odds of a 25 basis points rate cut stand at 63%, according to the CME FedWatch Tool, while the odds of a larger pivot of 50 bps stand at 37%. It is understandable why investors would be quite nervous this week ahead of the US labor data, given that the early August sell-off was triggered by payroll numbers that did not meet expectations; especially when the equity market is still around its peak and the Tech sector started its initial collapse. On the other hand, Citi analysts think that the weakness in the US labor market will continue in the August data, which might be a reason for the Fed to cut rates by 50 basis points. Later tonight JOLTS JOB OPENINGS (Jul) will kick off the US labor data series.
• ASIAN MARKET: Weak PMI data from CHINA & US are setting the negative tone, and more PMI reports from Asia – Pacific are scheduled for release on Wednesday, including China’s ‘unofficial’ Caixin service sector PMI. China’s ‘official’ PMI figures at the weekend showed that manufacturing activity slumped to a 6-month low in August as manufacturer prices fell and factory owners struggled to secure orders. Shanghai stocks opened on Wednesday at a 7-month low.
• COMMODITIES: During a volatile trading session on Tuesday, OIL prices plummeted to their lowest level since mid-December, with BRENT futures down 4.9% to $73.75 per barrel, and US WTI down 4.4% to $70.34 per barrel. This sell-off in oil prices came on news of a potential resolution to the dispute in Libya that has caused a halt in the country’s crude oil production and exports. It was reported that Libya’s legislature has agreed to appoint a new central bank governor within 30 days, following discussions sponsored by the United Nations. On Monday, Libya’s main port halted oil exports, and production was halted across the country due to a standoff between factions vying for control of the central bank and access to oil revenues. The impact of the dispute on Libya’s oil production has been striking. The National Oil Corporation (NOC) reported that total production fell dramatically to a little over 591,000 barrels per day (bpd) on August 28, down from nearly 959,000 bpd two days earlier, according to Reuters. This marks a significant drop from around 1.28 million bpd on July 20, indicating the severity of production cuts.
• JCI: has started the downward cue at the same time, where yesterday JCI fell from its historical high of 7726.66, closing down 78 pts / -1% to 7616.52 despite foreign spending still recorded in IDR 126.99bn (RG market). NHKSI RESEARCH advises investors/ traders to watch the critical Support level of 7605-7600 to determine whether this uptrend should consolidate further towards 7500, or not.
Company News
• CLEO: Hermanto Tanoko’s Issuer Eyes Double Digit Profit Growth This Year
• CUAN: Prajogo Pangestu’s Issuer Signs IDR 775M BNI Credit, Make Capital
• PTRO: Petrosea Secured IDR 2.32 Trillion Jumbo Loan
Domestic & Global News
Ministry of Finance Reveals the Main Causes of Middle Class Downgrading
Exclusive: Norway Wealth Fund May Divest Companies That Aid Israel in Gaza War, Occupied Territories
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