Today’s Outlook:

• All three major US indexes closed slightly higher on Tuesday (06/02/24) as investors digested a number of earnings reports from major US companies as well as comments from Federal Reserve officials on when the first interest rate cut could take place. Minneapolis Fed President Neel Kashkari said that the US central bank is not yet done dealing with inflation although it must be recognized that the 3-month and 6-month inflation trends have leveled off quickly to around the Fed’s target of 2%. Other Fed officials stated that they are not ready to determine when is the right time to ease their monetary policy amidst the uncertain pace of Inflation. On the other hand, it is felt that the Fed needs to leave the era of higher interest rates for longer as pressure on banks and commercial real estate property owners has been detected, which is an issue that was also raised by US Treasury Secretary Janet Yellen on Tuesday, although she believes the situation is still safely under control with the help of bank regulators. Meanwhile, earnings sentiment also remains a concern for market participants, where more than half of S&P500 companies have now released their 2023 results, with 81.2% of them beating expectations (as reported by LSEG data). Overall, profits of these S&P500 companies are expected to grow 8.1% yoy in 4Q/2023. Later tonight, the US Trade Balance figures will be monitored with a focus on Export – Import developments from the world’s number one economy.
• COMMODITIES: Brent & US WTI OIL futures prices rallied more than USD1/barrel respectively on Tuesday after the US Energy Department said that US crude oil production would not meet expectations; however, prices soon fell back after talk of an extension of the Israel – Hamas war ceasefire. Brent futures settled at USD78.59/barrel, up 0.77%; while US WTI futures closed at USD73.51/barrel after rising 0.73%. In its short-term energy outlook report, the US Energy Department expects US crude oil production to increase by 170k barrels/day (bpd) this year, down from the previous forecast of 290k bpd. The latest weekly report from the American Petroleum Institute has just released that US crude stockpiles only increased by 674k barrels, failing to meet the estimate of 2.1 million barrels, after stocks plunged by 2.5 million barrels in the previous week. Today there will be another report from the Energy Information Administration (EIA) measuring weekly changes in commercial crude oil stored by US oil companies. Inventory levels affect the price of petroleum products, which can impact inflation.
• EUROPE & ASIA MARKETS: Germany reported Factory Orders (Dec.) grew by a robust 8.9% mom versus projections of minus 0.1% and the previous month’s 0% growth. Construction PMI in Germany and the Eurozone was suspected to be sluggish in January, while the UK managed to record better Construction PMI (Jan.) growth and headed into expansionary territory. Eurozone Retail Sales for December were observed to remain weak with negative growth of 0.8% yoy, worsening from November at minus 0.4%. A number of economic indicators will be monitored from continental Europe today where the UK property sector and German Industrial Production will be in the spotlight. From the Asian continent, it is the turn of Indonesia and China to report their USD denominated Foreign Exchange Reserves today.
• JCI rallied 48 points to 7247.4 supported by Foreign Net Buy of IDR 719.8 billion, technically back to secure the position above the 10, 20, and 50 day Moving Average Support. One more step above the Resistance from the previous High level of 7275-7280 then JCI will be more free to continue strengthening towards the all-time-high TARGET area around 7370-7400. However, NHKSI RESEARCH would like to remind that on the last day of this holiday-laden trading week, investors should not add too much to their portfolio to avoid any uncertainty that may arise during this long-weekend holiday. 

Company News
• SMDR: Plans to Add 12 Ships This Year
• PTPP: Earn IDR3.5 Trillion in New Contracts by Early 2024
• PTBA: Company’s Subsidiary Plans an IPO

Domestic & Global News
• Sri Mulyani Distributes Incentives to Support the Development of the Electric Vehicle Industry
• China Regulator Announces More Curbs on Short-selling

Download full report HERE.