• US stocks closed in negative territory on Wednesday (06/12/23), triggered by a drop in megacaps and energy stocks as signs of a weakening labor market reinforced expectations that the Federal Reserve could start cutting interest rates early next year. The ADP National Employment report showed private sector job gains of 103,000 in November, below economists’ expectations of 130,000. This provided fresh evidence of a weakening labor market, a day after news of falling job openings in October. The latest labor data further proves that the tight monetary policy of the US central bank has successfully cooled the US economy, although analysts have become somewhat concerned about a broader economic slowdown ahead. Unit Labor Costs for the 3rd quarter were reported at minus 1.2%, a deeper drop than expected and certainly from the previous quarter which was still robust at 2.2%. Weakening Energy stocks weighed on the index, as Oil prices plunged 4% after US gasoline inventory data came in well above expectations, bringing concerns of high supply amid sluggish global demand. Market participants will be looking forward to another more comprehensive piece of labor data, Nonfarm Payrolls (Nov) to be announced on Friday, which will provide better clarity on the current state of the labor market. As known, labor data plays an important role in determining the Fed’s interest rate decision which will be held at the FOMC Meeting next week, as well as the start of a potential cut in March next year. Separately, economists are of the mind that they expect the Federal Reserve to keep interest rates unchanged at least until July. Other important economic data released yesterday was the US Trade Balance (Oct) data which ballooned the deficit to USD 64.3 billion, on the back of rising Imports and falling US Exports. Later tonight around 20.30 GMT, market participants will wait for the weekly Initial Jobless Claims report which is predicted to increase at 222k, compared to 218k in the previous week.
• COMMODITIES: Global Oil prices slumped about 4% down to the USD 70/barrel level, the lowest point since June, as the US released much higher-than-expected weekly inventory data, amid record-high US Oil production in Sept and sluggish global demand. The weekly data on US crude oil stocks actually fell by 4.6 million barrels, above the forecast drop of only 1.354 million barrels; on the other hand, gasoline inventories surged by 5.4 million barrels, well above the forecast increase of only 1 million barrels. This report follows after rating agency Moody’s downgraded China’s credit outlook and marked an increase in the country’s economic risks due to the property market downturn and lack of government stimulus. China is the world’s largest oil importer, which has also continued to increase its oil inventories this year – a trend that could lead to the country reducing oil imports in the coming months, especially if economic conditions worsen. Concerns over China are also coupled with the weak economies of most major countries. PMI data from Japan, the US, and the Eurozone remained largely disappointing in November.
• EUROPEAN MARKETS: Germany recorded Factory Orders (Oct.) which apparently missed the forecast growth of 0.2%, instead being released at minus 3.7% mom. Similarly, Germany Construction PMI (Nov.) is also still on a downward trend, in line with the UK; while Eurozone’s Construction PMI in November looks fresher. Eurozone Retail Sales in October has started to pick up slightly although still in negative growth territory, but at least it was able to grow on a monthly basis to a positive 0.1% mom from -0.1% in the previous month. Today, market participants will focus on the Eurozone 3rd quarter GDP report which is expected to weaken to 0.1% yoy, sluggish from the previous quarter at 0.5% growth.
• ASIAN MARKETS: China takes center stage today as it awaits Trade Balance (Nov.) figures which forecast a surplus of CNY 380 billion, down from CNY 405.47 billion in the previous month. However, sluggish Exports are expected to ease and Imports to remain stable. On the other hand, investors in Indonesia will monitor the Foreign Exchange Reserves (Nov.) data versus the previous position of USD 133.1 billion in October.
• The JCI’s position that still looks unsettled in the 7130-7150 Resistance region inevitably makes market participants doubtful about how the strong uptrend throughout November will be able to continue in December. NHKSI RESEARCH advises investors/traders to consider the possibility of a pullback to the Support 7050 region first, or even lower to the psychological 7000 level. If this does happen, use the momentum as an opportunity to Buy on Weakness to ride the next up-swing.
• BTPN : Will Hold a Right Issue
• CMRY : As of 3Q23, Sales Up 20.7%
• GEMS : Distribute USD90 Million Interim Dividend
Domestic & Global News
• Officially Effective, VAT Borne by the Government (DTP) Incentive for Houses Up to IDR 5 Billion
• Russia’s Putin, Saudi Crown Prince Discuss Further OPEC+ Cooperation in Whirlwind Visit
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