• US & European stock markets moved lower on Monday (05/02/24) with the Dow Jones Industrial Average leading US market weakness by shedding 0.7% following a spike in US Treasury yields after Federal Reserve Chairman Jerome Powell’s remarks further dampened hopes of an imminent interest rate cut. In a Sunday interview with a CBS TV show, Powell said that the resilient US economy could provide more time for Fed officials to seek a more cautious approach to rate cuts. Powell also said that they need to see data that confirms the path of inflation is actually sloping towards the 2% target. This view automatically pushed US Treasury yields higher, especially for the 2-year tenor where the yield jumped to a 1-month high of 4.483%, the Dollar Index also climbed up after touching a 12- week high of 104.6, while market participants now only predict a 16% chance of a rate cut being realized in March, far below the initial euphoria of 80% at the beginning of this year, and there are also now expected to be 5 rate cuts this year compared to 6 in the initial forecast. Speaking of economic indicators, the US Composite PMI (Jan) held in expansionary territory with the services sector (non-manufacturing) proving the most robust. Other sentiments affecting the market: Goldman Sachs said that some corporate performance reports fell short of analysts’ expectations; while awaiting results from media companies such as Walt Disney, Fox, and Warner Music Group; and not forgetting Alibaba, Uber, and chip designer Arm Holdings.
• ASIA & EUROPE MARKET: Small-cap stocks in Asia are also still down as investor sentiment is suspected to be still sluggish due to the lack of stimulus policy support from the Chinese government. Speaking of economic data, Japan and China also reported Services PMI (Jan) which both are still growing in expansionary areas; while from the European continent: only the UK managed to report Composite PMI moving in expansionary areas while Germany and Eurozone are still trying to get out of the contraction zone. Eurozone released PPI (Dec) where deflation widened to -10.6% yoy, from -8.8% in the previous month and was the biggest deflation in 3 months. For today, market participants are monitoring Household Spending from Japan which in December proved that household spending still dropped 2.5%. Later in the afternoon, German Factory Orders (Dec), S&P Global UK Construction PMI (Jan), and Retail Sales from Eurozone for Dec are expected to remain weak at -0.9% yoy, compared to -1.1% in the previous month.
• COMMODITIES: OIL prices rose for the first time in four trading sessions on renewed concern over the widening Middle East conflict after the US pounded Iran-linked gangs in Iraq, Syria and Yemen. In Russia, two Ukrainian drones attacked the largest oil refinery in southern Russia on Saturday, according to a Reuters source; the latest in a series of remote attacks on Russian oil facilities, which has led it to reduce exports of naphtha, a petrochemical feedstock. Brent crude oil closed 0.9% higher, at $78.22 per barrel and US WTI crude oil closed at $72.78 per barrel, up 0.7%. In other commodity sectors, spot GOLD prices were down 0.7% and gold futures were down 0.5% at $2,042.90.
• Indonesia recorded 4Q2023 economic growth of 5.04% yoy, exceeding consensus expectation of 5.0% and higher than Q3 at 4.94% supported by domestic spending. On a full year basis, the 2023 GDP stood at 5.05% and surpassed the projections of a number of institutions although the economic growth in 2023 is slower than the 2022 economic growth of 5.31%.
• In response to that result, JCI again had to fall below MA10 & MA20 Support and only rely on MA50 as the last Support exactly at yesterday’s low of 7188. If this level should also be broken, then NHKSI RESEARCH advises investors/traders to reduce positions as there is a high probability of JCI continuing consolidation towards 7100 again.
• PTRO: Secured IDR4.6 T EPC Contract
• ESSA: Recorded a Profit of USD34.61 million.
• AMMN: Optimistic that Smelter Construction Will Be Completed by May 2024
Domestic & Global News
• High Rice Prices Ahead of the General Election, the Great Harvest is at Stake
• Jerome Powell: Fed Will Wait After March 2024 to Cut Interest Rates
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