Today’s Outlook:
• The benchmark S&P 500 index and the Dow Jones Industrial Average closed lower in volatile trading on Thursday (05/09/24) after the release of a series of economic reports and investors paid attention to important employment data due on Friday. The DJIA fell 219.22 points, or 0.54%, to 40,755.75, the S&P 500 lost 0.30%, to 5,503.41, and the Nasdaq Composite edged up 0.25%, to 17,127.66. Eight of the 11 S&P 500 sectors declined, led by the health care and industrial sectors. The non-primary consumption sector led the gainers, partly driven by Tesla. Markets were jittery ahead of the release of comprehensive NONFARM PAYROLLS data – which will likely serve as a reference for the Federal Reserve to start cutting interest rates later this month. Earlier in the session, Wall Street’s main indexes rallied as economic indicators helped ease concerns over a declining labor market. A survey from the Institute for Supply Management showed service sector activity increased in August while jobless claims declined last week, according to data from the Labor Department. Friendly reminder: September is historically a weak month for US equity markets, with the S&P 500 down about 1.2% on average since 1928. The index has fallen more than 2.5% so far this week and Technology stocks have plunged about 4.8%.
• ECONOMIC INDICATORS: ADP NONFARM EMPLOYMENT CHANGE explained that in August, US private companies hired the fewest workers since January 2021 and data for the previous month was revised down, which may hint at a sharp deterioration in the labor market. This further reinforces the view that the weakness in the labor sector, which began to emerge in the July report, will continue into subsequent periods. New private sector employment rose by 99k in August, compared to a downwardly revised total of 111k in July. Economists had expected the figure to reach 144k, up from July’s preliminary figure of 122k. Meanwhile, the number of Americans applying for unemployment benefits for the first time stood at 227k in the week ending August 31, down 5k from the previous week’s revised (upward) level of 232k. Previous estimates suggested this figure would be in line with last week’s INITIAL JOBLESS CLAIMS preliminary figure of 231,000. Both data, released ahead of Friday’s Nonfarm Payrolls report, reinforced speculation of a larger Fed rate cut of 50bps at this September’s FOMC Meeting, which is now estimated to hold a 45% chance with a total of 111bps of policy easing expected by the end of the year.
• U.S. POLITICAL MAP: The latest national survey conducted by Emerson College Polling revealed that Vice President Kamala Harris holds a narrow lead over former President Donald Trump in the US presidential race, with 49% supporting Harris and 47% supporting Trump. In the broader political landscape, the general congressional ballot showed that 48% of voters supported Democratic candidates, while 44% supported Republican candidates. Popularity surveys for Harris and Trump are very evenly matched, with 51% viewing Harris positively and 49% unfavorably, and Trump holding a 47% favorability score with 53% viewing him negatively.
• ASIA & EUROPE MARKETS: SOUTH KOREA reported 2Q GDP at a rate of 2.3% yoy, although this was in line with expectations the economy actually slowed compared to 1st quarter growth at a rate of 3.3%. JAPAN’S NIKKEI is already down 5% this week, and could fall further if the YEN continues to strengthen. The Dollar dipped below 143.00 Yen on Thursday for the first time since August 5th and from the momentum it looks set to continue its decline. With a stronger currency in their pockets, Japanese investors are accumulating assets overseas. Thursday’s economic data showed that there was net buying in foreign bonds for the fifth week, and net buying in foreign stocks for the third week. With the prospect of a Fed rate cut and the inclination of further monetary policy tightening from the BOJ, this is a combination recipe for further Yen strength. Japanese household spending data for July was released on Friday morning, following figures on Thursday that showed real wages rose in July for a second month. Apparently household spending fell in July by 1.7%, lower than the 0.2% contraction economists had expected, showing a weakening trend from the 0.1% growth in the previous month. At least this data may slightly restrain the BOJ from raising interest rates again, while limiting further Yen gains. From the rest of the world, EUROZONE 2Q GDP figures will be of interest to European markets today.
• JCI really looks giddy at around the record high of 7726, although yesterday’s trade was still supported by Foreign Net Buy of around IDR 584.58 billion (RG market); thereby successfully making the YTD FOREIGN BUY position back into the green for the first time after months of massive selling, worth IDR 313.95 billion (RG market). The RUPIAH exchange rate has not lost its power even now below IDR 15400/USD. However, facing the important NONFARM PAYROLL data later tonight in the US and what the market reaction will be, NHKSI RESEARCH still recommends not to be too aggressive in long positioning at this time, and be more vigilant to set Trailing Stops.
• NCKL: Trimegah Bangun Has Signed a Nickel Ore Agreement
• BRMS: Progress of Subsidiary’s Gold Mine in Palu
• LABA: New Controller Holds Tender Offer for LABA Shares IDR 121 per Share
Domestic & Global News
ESDM Aims Battery Energy Storage for EBT to Reach 18 GW in 2060
US Warns Against Nippon Merger With US Steel, Citing China Steel Glut
Download full report HERE.
