Today’s Outlook:
• The S&P500 closed slightly lower on Monday (04/03/24), down 0.12% to 5130.95 after an up-and-down trading session as investors nervously awaited the release of a number of economic data and Federal Reserve Chairman Jerome Powell’s testimony. Apple contributed to the negative sentiment with a 2.5% drop following a USD 2 billion fine from the European Union for preventing Spotify and other music streaming platforms from using payment options outside the App Store. In other sectors, a rally in semiconductor chip stocks, including Nvidia, helped keep the S&P500 from hitting a new record high in intraday trading on the back of investors’ expectations of increased demand for AI-related products. The S&P500 has shot up 21% in the four months to the end of February. Bank of America Global Research has even raised its year-end target for the S&P500 to 5400 from 5000, indicating 5% upside potential from its current position. Market participants await a series of indicators that will shed light on the health of the US economy in terms of Services sector PMI and Factory Orders (Jan) on Tuesday, as well as Non-farm Payrolls on Friday. Also this week, investors await key comments from Fed Chairman Jerome Powell who is scheduled to speak on Wednesday and Thursday. Last Monday, Atlanta Fed President Raphael Bostic had already preceded by suggesting that the Fed needs to be careful in deciding to cut interest rates in the near future because it could cause euphoria that would actually push demand (Inflation) higher under the pretext of economic growth, thus wasting the central bank’s efforts to control Inflation so far. In response, the chance of a pivot materializing in June deflated to 49.5%, down from 57% a day earlier.
• ASIA & EUROPEAN MARKETS: Earlier this morning, South Korea announced their 4Q23 GDP which managed to come in-line with expectations at 2.2% yoy, up from 1.4% in the previous quarter. As for the neighboring country, Japan also reported Tokyo CPI & Core CPI (Feb) which appreciated to 2.6% yoy and 2.5% yoy respectively, up from 1.6% in the previous month for both indicators. Later in the morning, Japan will be the first country to announce their Services PMI which is expected to remain in expansionary territory albeit showing a slight decline. What market participants will be paying more attention to is probably China’s Caixin Services PMI (Feb), which is expected to be firmly in expansionary territory. While in the afternoon it is the turn of Germany, Eurozone, and the UK to release their Composite & Services PMI data in Feb. Not to forget the Eurozone will also reveal their Inflation rate at the producer level, where deflation is expected to soften to -0.1% mom from -0.8% in the previous month.
• COMMODITIES: OIL prices closed in negative territory on Monday, after OPEC+’s decision to extend the production cut period in Q2 was finally decided in line with market expectations. US WTI benchmark prices for the May contract slid 1.5% to USD 78.74/barrel, while Brent futures fell 0.8% to USD 82.86/barrel. Russia & Saudi Arabia, who lead the Organization of the Petroleum Exporting Countries & its alliance, known as OPEC+ agreed to continue production cuts of 2.2 million barrels/day until the end of June. However, this commitment did not necessarily lift prices as it has been priced-in in the market; while production increases are actually happening in countries that are not members of OPEC+ such as the US, plus sluggish demand from the world’s number one oil importer, China, which is still struggling to boost its economy. Meanwhile, expectations of a ceasefire in the Gaza War before Ramadan fasting month (March 10) reached a dead end again as Israel boycotted discussions on the ceasefire after Hamas failed to provide a list of names of surviving hostages. US Vice President Kamala Harris also called on Hamas to immediately accept the offer of a 6-week ceasefire in order to create a situation towards peace in the Gaza War. Attacks on commercial cargo ships in the Red Sea by Yemeni Houthi militants, launched in solidarity with Palestine, are still ongoing with the Houthis sinking a ship for the first time last week.
• In other commodities, GOLD raced to all-time highs on Monday, driven by factors of continued geopolitical tensions and the prospect of a Fed rate cut in June. Spot gold prices rose 1.5% to a record USD 2126.30, while gold futures for the April contract advanced 1.4% to USD 2125.65/ounce. The rise in other precious metals was also followed by PLATINUM and SILVER which appreciated 1.9% and 3.3%, respectively. In contrast, on the industrial metals side, COPPER futures fell 0.4% in anticipation of economic data from top importer China, which will hold its 2024 National People’s Congress this Tuesday and is expected to announce more stimulus packages in addition to its economic forecast for 2024. However, analysts expect that sluggish demand from China is likely to be offset by India as they are the fastest growing economy in 2023, where their infrastructure spending is expected to lift copper demand.
• JCI Support is in a quite precarious situation as it closed at the lowest Closing position in 2 weeks, critically testing the lower channel Support (uptrend) and has touched MA50 at yesterday’s Low of 7260. NHKSI RESEARCH needs to remind investors / traders to be prepared to reduce positions when the consolidation continues, as it has the potential to change the upward trend that has been going on since the bottom of November, into a Sideways trend (topping) with the following Support in the 7140-7100 range. The sentiment weighing on the market is the position of the Rupiah exchange rate which is getting weaker against the USD, last perched at IDR 15773 / USD due to a hefty outflow of foreign funds in the past week worth IDR 3.03 trillion (all markets). For the short term, it seems that the Rupiah still has limited weakening potential until IDR 15800 / USD, up to the previous high level of IDR 15848.
Company News
• BWPT: Net Profit Soars 912%
• EXCL: Partnering with Huawei for AI Business
• ADRO: Capex Realization Increases 53% in 2023
Domestic & Global News
• Tiktok Shop Migration Almost 90%, Ministry of Trade: E-Commerce Rules Can Be Revised
• Australia Warns of Threats in Asean, Highlighting South China Sea Conflicts
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