Today’s Outlook:

• World stock markets recovered on Tuesday trading (06/08/24) after the previous day’s sell-off, while US Treasury yields rose and the US Dollar strengthened slightly as investors moved back into riskier assets and comments from the US central bank eased recession fears. Earlier, the Nikkei’s roughly 10% rebound in Tokyo brought some relief after Monday’s 12.4% drop, which kick-started a global equity market collapse, with the biggest one-day sell-off since the 1987 Black Monday incident. On Wall Street, the Dow Jones Industrial Average rose 294.39 points, or 0.76%, to 38,997.66, the S&P 500 advanced 1.04% and the NASDAQ Composite appreciated 1.03%. MSCI global shares also rallied 1.17%, after the index fell more than 3% on Monday for the third consecutive day.

• US FEDERAL RESERVE: US central bank policymakers on Monday rejected the notion that weaker-than-expected July jobs data indicated the US economy is falling into recession, although it must be acknowledged there is an economic slowdown. Analysts also think that one monthly data does not necessarily conclude the opinion of a recession; especially when there is not much other supporting economic data this week so market participants should actually wait for further developments. BANK OF AMERICA in their note to customers on Tuesday, identified 4 reasons why the US economy is believed not to fall into a hard-landing scenario. First, the Fed’s reaction has been increasingly dovish. Second, while there has been weakness in the labor sector, it is almost certain that the Fed will implement a rate cut in Sept. Thirdly, with lower interest rates, the risk of bad loans will be further reduced. Fourth, even if the US economy is severely shaken, bonds will benefit from this as investors seek safe-haven assets. In conclusion, Bank of America generally maintains an optimistic outlook, although there are many challenges ahead, the 4 factors above are believed to provide a safeguard against hard-landing concerns.

• CURRENCY & FIXED INCOME: The US DOLLAR recovered against other major currencies, the Japanese Yen stabilized around 7-month highs against the US currency following a recent rebound in highs. The DOLLAR INDEX, which measures the greenback’s strength against a basket of other world currencies including the Yen and Euro, rose 0.07% to 102.94. Against the Japanese Yen, the US Dollar strengthened 0.4% to 144.74 while the Euro fell 0.2% to USD 1.093. US Treasury yields rose as concerns that the US economy is rapidly entering a recession were deemed exaggerated, while safe-haven demand for US bonds also diminished as stock prices began to recover. The yield on the 10-year Treasury note rose 12 bps to 3.903%, from 3.783% late Monday. The yield on the 30-year bond rose 12.1 bps to 4.1924%. Meanwhile, the 2-year US Treasury yield, which usually moves in tandem with interest rate expectations, rose 10.9 bps to 3.9936%, from 3.885% on Monday night.

• U.S. POLITICAL MAP: Vice President Kamala Harris, who has received the full support of the US Democratic Party to run for the US Presidential Election against Donald Trump, is running with Minnesota Governor Tim Walz as her presidential candidate.

• ASIA & EUROPE MARKETS: The European STOXX 600 index was finally able to close 0.29% higher in a volatile session, where it initially fell as much as 0.54%. GERMAN Factory Orders (Jun) and UK S&P Global Construction PMI (Jul) data which rose above expectations seemed to have helped maintain positive sentiment in European markets. Today, Halifax housing price index data from the UK and Industrial Production will be highlighted by market participants. Meanwhile from the Asian continent, CHINA Import-Export data will be closely monitored as consensus investors expect growth in July in the international trade activities of the world’s second largest economy.

• COMMODITIES: OIL prices closed higher on Tuesday after hitting multi-month lows on Monday, as traders’ attention turned to supply tightness as financial markets recovered, easing concerns about the outlook for energy demand. US WTI crude oil prices closed up 0.36% to USD 73.20/barrel while BRENT closed at USD 76.48/barrel, up 0.24%. In terms of precious metals, GOLD prices melted on the strengthening US Dollar and rising bond yields, although expectations of a US rate cut in September and escalating CENTRAL EAST CONFLICT limited losses. It is known that the Lebanese armed group Hezbollah launched a series of drone and rocket attacks on northern Israel, in retaliation for the killing of one of their generals in Iranian territory. Gold spot price fell 0.82% to USD 2,387.88/ ounce, which yesterday’s low point has tested the first support at USD 2364/ounce. If the Gold price breaks the second Support layer at USD 2350, it is certain that the Gold price will continue to slide down towards USD 2290-2280 / ounce.

• INDONESIA: Today, we will monitor the Foreign Exchange Reserves (Jul) figure which was last at USD 140.2 billion. JCI equally rebounded 70pts / almost 1% to 7129.22 following the recovery in regional market yesterday and its closing above MA50 / 7110 Support makes it potential for further strength today towards 7200-7265. However, NHKSI RESEARCH would like to remind investors/ traders that it is better to trade fast at times like this when market uncertainty & volatility factors are still high.

Company News
• TPIA: Prajogo Pangestu’s Issuer, Chandra Asri Spends USD158.6 Million in Capex
• EXCL: XL Axiata Achieves IDR 1.02 Trillion Net Profit in the First Half of 2024
• ROTI: Approved to Buyback Shares, Here’s the Price Range

Domestic & Global News
The Government is Asked to Evaluate Tax Incentives to Buy Houses, This is the Reason
Kamala Harris Picks Minnesota Governor for Vice President

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