Today’s Outlook:

• The S&P 500 jumped 1.3% on Friday (03/05/24) while the Dow Jones Industrial Average gained 450 points and the NASDAQ led the gains by surging 2% on the back of Apple’s stock appreciation in the Technology sector, amid economic data that showed public sector job additions in April were below expectations. This raised hopes that the Federal Reserve could start cutting interest rates earlier than expected. The 10-year US Treasury yield fell 6 basis points to 4.511% after NONFARM PAYROLL data showed the US economy added jobs at a slower pace in April, adding only 175,000 jobs last month (the lowest since October 2023), missing the 243,000 forecast by economists polled by Reuters, compared to the 315,000 figure from the revised March. The Unemployment Rate also rose to 3.9% in April, up from 3.8% the previous month, but still the 27th consecutive month below 4%. Average hourly wage growth of 3.9% was the smallest since May 2021 and continues its steady decline towards the mid-3% range, which US central bank officials say is in line with their Inflation target of 2%.
• US TREASURY YIELD fell, along with the DOLLAR, after the above Nonfarm Payrolls report where investors have advanced the Fed’s rate cut this year to September, with the market pricing in a 66.8% chance of a cut of at least 25 bps, up from 61.6% in the previous session, according to CME Group’s FedWatch Tool. The yield on the benchmark 10-year US Treasury note fell 6.1 basis points to 4.51%, from 4.571% at the end of Thursday, while the yield on the 2-year note, which typically moves with interest rate expectations, fell 6.5 basis points to 4.8119%, from 4.877%. The 10-year bond fell nearly 17 basis points on the week, the biggest weekly decline since mid-December; while the 2-year bond fell about 19 basis points, the biggest weekly decline since early January. MSCI’s worldwide stock index rose 8.67 points, or 1.14%, to 769.19 and gained 0.91% on the week, in line with its second consecutive weekly gain.
• Against the Japanese Yen, the DOLLAR was 0.48% weaker at 152.89 while the Pound sterling strengthened 0.1% to USD1.2547. The Greenback has fallen more than 3% against the Yen in a week, the biggest weekly percentage decline since late November. JAPANESE YEN continued its rebound from 34-year lows, ending a tumultuous week in which there were allegations of intervention by Japanese authorities. Traders suspected the Japanese authorities would take action on at least 2 days this week and data from the Bank of Japan showed Japanese officials may have spent around USD 60 billion to defend the sinking Yen.
• EARNINGS REPORT: Apple (NASDAQ: AAPL) jumped 6%, leading gains in the broader technology sector after second-quarter results topped estimates and the iPhone maker announced a USD 110 billion share buyback program, as well as a dividend hike. iPhone sales were slightly below analysts’ expectations, but the results were better than the worst case scenario, especially in China, where slowing growth has been a major concern for investors.
• COMMODITIES: OIL prices fell and are on track for the steepest weekly decline in 3 months after the employment report. US WTI crude fell 1.06% to USD 78.11/barrel and BRENT settled at USD 82.96/barrel, down 0.85%.
• JCI rallied 17.3 points to 7134.72, although not accompanied by foreign buying interest as they recorded a net sell of IDR 853.39 billion, bringing the total foreign net sell to a massive IDR 5.29 trillion (all markets). JCI is still running in a PARALLEL CHANNEL patterned downtrend since the decline from a peak in March. NHKSI RESEARCH expects a potential technical rebound today on the back of banking stocks that have been slithering in their long term support area, thanks to positive regional market sentiment on US Nonfarm Payroll data and continued expectation of US rate cut projection. Nearby resistance around 7200 will be the key test today amid the release of Q1 GDP data which is expected to come in around 5.0%.

Company News

• JPFA: Gain IDR664 Billion Profit
• GJTL: IDR338 Billion Profit
• ASSA: Profit Reached IDR71M in 1Q24

Domestic & Global News
• Bulog’s Rice Price Ceiling Rises, YLKI Worried that People’s Purchasing Power Will Take a Hit
• Israel Attacks Rafah After Hamas Claims Responsibility for Deadly Rocket Attack

Download full report HERE.