Today’s Outlook:
• The lack of sentiment from the US market as they are on the 4th of July Independence Day holiday, made market participants set their eyes on European stocks which appreciated on Thursday trading (04/07/24) on the back of optimism that US interest rate cuts this year will be able to materialize after the latest US economic data showed an economic slowdown; while Europe is busy dealing with political processes such as the UK election situation which predicts a historic victory for the Labour Party. Similarly, the French bourse climbed a second day by 0.8% amid more intense efforts by the opposition France National Rally (FRN) to prevent the far-right from taking power. In Europe, GERMAN industrial orders fell unexpectedly in May, while another report showed SWISS inflation fell last month, making markets think that it is unlikely that the Swiss National Bank will cut interest rates again later this year. EUROPEAN CENTRAL BANK officials mostly believe inflation will continue to fall but some are uncomfortable with last month’s rate cut given the many negative surprises, based on their meeting results. Today more economic data will come from Europe such as: UK housing data, German Industrial Production, Eurozone Retail Sales.
• Auto stocks are on the move again as EUROPEAN UNION said it plans to impose tariffs of between 17.4% and 37.6% on CHINA-based electric vehicle makers such as BYD, Geely and SAIC. However there is a 4-month timeframe in which discussions will resume with the CHINA government, which has predictably threatened retaliation.
• Talking about ECONOMIC INDICATORS, the weakest updated US economic data on labor, grows the chance of the first rate cut happening in September to 74%, growing from 65%, for a total of 47bps of rate cuts over the rest of the year. Later tonight from 1930WIB the key US labor data of Nonfarm Payrolls (June), along with average Hourly Wages, and not forgetting the Unemployment Rate; will further shape the thinking of Fed officials in their interest rate decision.
• With the US economy heading towards a soft landing, the US DOLLAR retreated regularly against other currencies. The EURO rose to USD 1.0797 from USD 1.0666 lows, while the DOLLAR INDEX hit a 3-week low. Only the YEN has yet to recover from decades of lows, currently trading at 161.11 / Dollar after plummeting to a 38 year bottom: 161.96 / Dollar on Wednesday.
• The USD drop benefited COMMODITIES, where GOLD prices rallied to USD 2358 / ounce, from USD 2318 earlier in the week. OIL prices edged lower after a day of gains on the back of a huge unexpected drop in US oil stocks. BRENT retreated 43cents to USD 86.93/barrel, while US WTI deflated 54cents to USD 83.03/barrel.
• While INDONESIA market participants today will be waiting for Foreign Exchange Reserves (June) information, JCI again comfortably cruised into the 7220-7280 Resistance region; instead closing Thursday’s trading with a Shooting Star-like candle. The formation of this candle in the Resistance region and at a time when the RSI is about to enter the Overbought region, inevitably raises suspicion indicating the market is starting to overheat and pullback anticipation must be installed immediately. NHKSI RESEARCH advises investors/traders to start setting Trailing Stop levels for their respective portfolios at the end of this week, ahead of the US Nonfarm Payroll data which may provide surprises beyond market expectations that have the potential to shake regional markets.
Company News
• WIFI: Bond Issued Successfully, WIFI Boosts Telecommunication Infrastructure
• DOID: Delta Dunia Makmur Sets Dividend Rate at IDR 16,384, Investors Receive IDR 81.92 Billion
• PALM: Voluntary Tender of MMLP Shares, Provident Prepares IDR 969 Billion
Domestic & Global News
Indonesia’s Economic Growth in Prabowo’s First Year 2025 Set at 5.1-5.5%
China-built EVs Hit with Duties in Biggest EU Trade Case Yet
Download full report HERE.
