Today’s Outlook:
• The S&P 500 and NASDAQ composite indexes ended flat on Thursday (06/06/24) taking a quick break after hitting record highs the day before, ahead of the key US labor market report NONFARM PAYROLLS. Technology stocks gradually fell; Nvidia retreated 1.1% and returned to the position of the world’s No. 3 largest company after briefly overtaking Apple to No. 2. Investors will focus on Friday’s crucial US Nonfarm Payrolls report, where economists expect the US economy to add 186k new jobs, slightly up from the previous month’s 175k. The INITIAL JOBLESS CLAIMS report is the latest data to show an easing labor market where the latest week’s jobless claims rose more than anticipated at 229k, up from last week’s figure of 221k which was revised up, also higher than economists’ forecast of 220k. As such, this result makes it possible for the Federal Reserve to start cutting interest rates, following two earlier released labor data namely new job creation in the private sector and job openings; both of which also showed weakness. The EUROPEAN CENTRAL BANK (ECB) has already implemented its first interest rate cut since 2019 at their meeting yesterday, bringing down the benchmark rate by 25bps to 4.25%. In addition to the ECB, the DENMARK central bank also cut its benchmark interest rate by = 25 bps to 3.35%. The European central bank’s action is expected to further motivate other world central banks to start cutting interest rates, even before the Fed is predicted to execute a 25bps pivot in September this year. The percentage chance of that happening already stands at 68% currently, as quoted from CME FedWatch survey tool; as well as market pricing-in 2 rate cuts this year, according to data from LSEG and Reuters poll. Other important ECONOMIC INDICATORS that will complement the US labor data series are the UNEMPLOYMENT RATE (May) which is currently expected to remain stagnant at around 3.9%, as well as the Average Hourly Wage (May) data which is also flat at 3.9% yoy.
• EUROPE & ASIA MARKETS: GERMANY yesterday reported that their Factory Orders for April have not been able to recover to the positive growth of 0.6% as expected, instead still dropping to -0.2% mom, although not as much as the -0.8% weakening in the previous month. Today the Asian continent will be exposed to equally important data from JAPAN: Household Spending for April has started to grow positively on an annualized basis, up 0.5% yoy compared to -1.2% in the previous period. After yesterday’s rate cut, EUROZONE will present Q1 GDP data today which is projected to grow 0.4% yoy, stronger than the previous 0.1%. Of course they will also want to see German Industrial Production support the European economy with 0.1% mom growth, bouncing back from -0.4% a month earlier. Following this morning market participants will be monitoring CHINA’s Trade Balance data and more vitally May’s Export & Import growth, which, if Exports are able to grow significantly to 6.0% as expected (from 1.5% in the previous month) will bring relief and fresh air to the signs of economic improvement there.
• COMMODITIES: OIL prices rose 2% on Thursday after the European central bank voted to cut interest rates, fueling hopes that the Fed will do the same; while OPEC+ ministers assured traders that the latest oil production agreement could change depending on the market. BRENT futures closed USD 1.46 higher or 1.86% at USD 79.87/barrel. Meanwhile, US WTI futures were up USD 1.48 or 2% at USD 75.55. Lower fuel costs and reduced post-pandemic supply constraints have helped lower the global Inflation rate to 2.6% in the 20 countries that use the Euro, from 10% by the end of 2022. GOLD prices hit a two-week peak of USD 2,378/troy ounce after the US Bureau of Labor Statistics announced weaker-than-expected jobs data. Gold spot prices were trading at USD 2,369, registering a 0.54% gain after bouncing off a weekly low of USD 2,320.
• INDONESIA will be watching the Foreign Exchange Reserves figure (May) today. JCI tried to bounce back a little from the slump at the Support level of 6950, although it was not able to close Thursday’s trading above the psychological level of 7000. NHKSI RESEARCH expects the end of this week will still have a lot of uncertainty factors in the market while waiting for Nonfarm Payrolls data from the US later tonight, therefore investors/traders are still advised to maintain a WAIT & SEE attitude. Please note that foreign net sell continues, yesterday recorded at IDR 592.03 billion (all markets).
Company News
• MDKA: Strengthen Capital Structure, MDKA Permits Private Placement of 2.44 Billion Shares
• MIKA: Mitra Keluarga (MIKA) to Disburse IDR 450 Billion Dividend
• EMTK: EMTK Subsidiary Holds Tender Offer for CASS Shares at Below Market Price
Domestic & Global News
Sri Mulyani tells Prabowo’s government to keep inflation at a maximum of 3.5%
Toyota Rocked by Certification Test Scandal, from Yaris Cross to Corolla
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