Today’s Outlook:

• All three major US indexes closed higher on Wednesday (06/03/24) with the NASDAQ leading the gains by 0.58%, as economic data and statements from Federal Reserve Chairman Jerome Powell supported expectations that the US central bank will realize an interest rate cut this year. Powell made it clear that a pivot plan is on the horizon and that the US economy appears to be far from recession, although he did not provide a specific timeline for when interest rates could begin to be lowered as inflation remains volatile. Inflation has been tamed significantly since hitting a high in 2022, but policymakers still need to see a more convincing downtrend before they are confident for a rate cut. Helping the overall market sentiment, chipmakers led the market rally after slumping the day before, as the Philadelphia semiconductur index jumped 2.4% to a record-high close for the fourth time in 5 trading sessions.
• ECONOMIC DATA: US employment in the private sector aka ADP Nonfarm Employment Change was somewhat weaker than expected in February (actual: 140k, forecast: 149k) but still higher than the previous month’s 111k. Furthermore, the Job Openings and Labor Turnover Survey (JOLTs) also showed that job openings started to fall in January (8.863m actual vs 8.889m previous period), although still considered quite healthy as it exceeded estimates and indicates that there is still strength in the labor market. Another important economic indicator, Nonfarm Payrolls, will be awaited by market participants on Friday, to provide more clarity on labor market conditions. Later in the evening, a series of other economic data will be released such as: Trade Balance (Jan.) plus US Export – Import conditions, Initial Jobless Claims, Nonfarm Productivity and Unit Labor Costs for the 4/2023 quarter.
• FEDERAL RESERVE BEIGE BOOK: explains the outlook for the US economy will continue on a positive trend as expectations of interest rate cuts can boost economic growth, coupled with easing tight labor market and inflationary pressures. The Fed also sees that economic activity has started to pick up since early January, and the outlook for economic growth in the next 6-12 months will be characterized by stronger demand and softer monetary policy.
• EUROPEAN & ASIAN MARKETS: Germany reported a Trade Balance surplus of EUR 27.5 billion but more importantly this figure represents the highest surplus on record, surpassing the previous largest in 2016 of EUR 24.1 billion, on the back of a massive increase in Exports and Imports, which managed to turn positive to 6.3% mom and 3.6% mom respectively in January from a minus in December, and well above estimates of only around 1 percent. The HCOB Germany Construction PMI also ticked up, as did the Eurozone and the UK. Later this afternoon, the health of the UK housing index and German Factory Orders will be further monitored regarding European economic conditions, before the ECB determines the interest rate decision tonight at around 20.15 WIB where the market is expected to be held at 4.5%. Today the Asian continent will also steal the spotlight, as China’s Trade Balance will be in focus where the surplus is expected to increase by around 46% in February on expectations of Import growth. INDONESIA itself will release its Foreign Exchange Reserves (Feb.) figure at 11.00 am GMT, with a comparison of USD145.01 billion in January.
• COMMODITIES: OIL prices rose around 1% on Wednesday on the back of lower-than-expected US crude inventories on the back of a massive reduction in refining and gasoline stocks; plus the Federal Reserve Chairman’s statement further affirming the prospect of interest rate cuts this year, which is expected to boost economic growth and ultimately fuel oil demand. Brent futures rose 1.1% to USD 82.96/barrel the first gain in 5 days, while US WTI rose 1.3% to USD 79.13. The US EIA reported an increase in crude oil inventories from energy companies by 1.4 million barrels in the week ended March 1, smaller than analysts’ forecasts in a Reuters poll of 2.1 million barrels. The scarcity situation is also starting to be felt due to large reductions in oil stocks at refineries, including diesel, gasoline, and heating oil The weakening US DOLLAR slipping to a 1-month low also helped positive sentiment for demand for oil for non-US buying countries. SENTIMENTS SUPPORTING recent oil prices: from China setting a 5% economic growth target this year, to the stalemate of peace talks and hostage exchange from the Gaza War between Israel-Hamas, to the continued supply disruptions due to increasingly fatal Houthi militant attacks in the Red Sea; last but not least OPEC+ has just announced an extension of production cuts by 2.2 million bpd in the 2nd quarter.
• JCI successfully moved back above the Resistance 3 Moving Average, placing it back on the Uptrend path with Closing position 7329, 80 yesterday. Foreigners started to net buy again although the number is relatively small at IDR 86 billion (all markets), compared to net sell of IDR. 2.1 trillion over the past week. NHKSI RESEARCH expects bullish sentiment can still be maintained in today’s market, especially with regional market sentiment that is quite upbeat due to the dovish comment from the Fed, and the strengthening of EIDO 1.72% in the US market.

Company News
• PTPP: Net Profit Soars 77%
• BBYB: IDR573 Billion Loss
• TMAS: Recorded Net Profit of IDR782.61 billion.

Domestic & Global News
• Airlangga Meets Australian CEOs, Discussing IKN to Nickel
• Biden, Trump Woo Haley Voters, 2024 Election’s New Prize

Download full report HERE.