Today’s Outlook:

• The DJIA rocketed 1500 pts to a record high on Wednesday trading (06/11/24); major stock markets around the world surged, while Bitcoin hit their All-Time-High and the US Dollar posted its biggest daily surge in 4 years after DONALD TRUMP WAS ELECTED AS US PRESIDENT. Trump’s landslide victory hit long-term US Treasuries and revived the “Trump Trades”; rising yields anticipated that Trump would raise tariffs as he had promised, thereby increasing the US deficit and inflation and causing the Federal Reserve to cut interest rates less than it should. A massive rally in risky assets such as the stock market was immediately seen, especially small-cap stocks as Trump’s ideas were seen as favorable for companies. Sharp gains were also seen in stocks of cryptocurrency companies, energy companies, and prison operators, while renewable energy stocks fell. The market is also watching whether the Republicans can maintain a majority in the House of Representatives after taking control of the US Senate, which would be useful to reduce opposition to Trump’s agenda.

• The VIX, a measure of stock volatility also considered the “Wall Street fear gauge,” plummeted 21% as investors celebrated the clarity of the election results. The S&P 500 Index jumped 2.5%, the Dow Jones Industrial Average skyrocketed 3.6%, and the Nasdaq Composite lifted 3%. All three compact indices hit record highs on Wednesday. MSCI’s index of world stocks rose 1.3%. Shares of electric car maker Tesla (NASDAQ:TSLA) surged 15% after CEO Elon Musk emerged as one of Trump’s key supporters in the final stages of his 2024 campaign. Investors seem to be betting on Tesla benefiting from Musk’s relationship with Trump, who said he would create a government efficiency commission led by Musk to cut federal spending. Shares of Trump’s social media company, Trump Media & Technology Group, rose 5.9% after surging as much as 42% overnight. The share price has halved since reaching a record high in March.

• CURRENCY & FIXED INCOME: DOLLAR INDEX (DXY) rallied 1.7% and recorded its best day since March 2020. EURO was hurt by potential tariffs and the widening gap between US and European tariffs. The euro was down 1.8% at USD 1.0730, set for its biggest daily decline since the 2016 Brexit referendum and on top of a 1.2% drop in POUNDSTERLING. The US DOLLAR jumped 2% to 154.59 Japanese YEN, and rose 1.4% against the YUAN to 7.1969 Yuan on reports of CHINA banks selling Dollars to slow the Yuan’s decline.

– US borrowing costs surged especially for long-term bonds, indicating concerns from investors about the path of the US deficit. The 10-year US TREASURY YIELD rose 14 basis points to 4.4343%, its biggest daily gain in nearly 7 months. The 30-year US Treasury yield jumped 16 bps to 4.6085%, also the biggest daily gain since the March 2020 pandemic-induced volatility. Although markets still believe the FEDERAL RESERVE will cut interest rates by 25 basis points at the conclusion of the two-day FOMC MEETING on Thursday (Friday morning GMT), they have slightly reduced bets on further easing in December. Markets reacted to the election results by cutting bets on the Fed’s rate cut plans next year, where the FED FUND RATE is expected to remain above 4% until May 2025. The market had expected a cut of around 42 bps this year and another 62 bps reduction in 2025. The estimate for next year is already down from around 90 bps a few weeks ago, based on LSEG data.

– BITCOIN emerged as one of the clear winners today. The cryptocurrency rose to a record high of USD 76,086 and was last up 9.6%. Trump is seen as more actively supporting cryptocurrencies than the Democratic candidate, Vice President Kamala Harris.

• ASIA & EUROPE MARKETS: Outside the United States, investors were decidedly lackluster, weighed down by concerns that higher tariffs under Trump would hurt global trade and economic growth. EURO extended late in the day after German Chancellor Olaf Scholz sacked his finance minister, and said he would hold a parliamentary vote of no confidence in the government in January, sparking political turmoil in Europe’s largest economy. EUROPEAN stocks lost earlier gains and fell 0.5%. The MEXICO peso slumped to its weakest level in more than 2 years. Later tonight the BANK OF ENGLAND will deliver its interest rate decision where consensus expects a 25bps cut to 4.75%.

– EUROPEAN OBLIGATIONS rallied, and the GERMAN 2-year yield fell 11 basis points to 2.19%, while money markets expect EUROPEAN CENTRAL BANK rates to move lower. For European businesses, Trump’s return to the White House translates into major trade and geopolitical policy uncertainties, with negative implications for growth on the continent, Berenberg chief economist Holger Schmieding said. For info, German Factory Orders (Sep) have already picked up considerably on a monthly basis, Services activity also became more expansionary in Oct; including the Composite PMI (Oct) for EUROZONE finally entered into expansion territory aka the 50 mark helped by their Services sector.

– CHINA looks to be at the forefront of tariff risks, and its currency is trading full of high volatility against the Dollar, around its record area as well. China’s stock market has surged to an almost month high as people expect key policymakers meeting in Beijing this week to approve the refinancing and spending of local government debt. China’s leading shares lost early gains to close flat, and Hong Kong shares fell more than 2%. This morning will see Trade Balance data as well as China’s Export-Import growth for Oct.

– MEXICO’S PESO plunged to 20.8038/USD for the first time since August 2022, more than 3% below the previous close – the biggest drop since Mexico’s summer elections shook domestic assets.

– UKRAINE international treasury bonds rose nearly 2 cents, boosted by bets that Trump’s second term could hasten the end of the RUSSIA-UKRAINE WAR.

• COMMODITIES: The sharp rise in the Dollar depressed OIL prices, and other commodities, as it makes them more expensive when purchased in other currencies. US WTI crude fell 0.2% to USD 71.83/barrel, while BRENT dropped 0.6% to a price of USD 75.11. GOLD prices plunged 3.1% to USD 2,660.22/ounce, slipping from a recent record high of USD 2,790.15.

• INDONESIA: Today will release Foreign Exchange Reserves (Oct) info which will be compared to the previous month’s position of USD 149.9bn. NHKSI RESEARCH thinks Trump’s leadership will pose the following challenges for Indonesia: first, there is a potential that Trump will increase tariffs on imported Indonesian products by 20%. Based on Sept 2024 data, Indonesia’s second largest export is to the US market, so there is a possibility that Indonesia’s exports to the US will fall. Secondly, Trump is also considered to prioritize investment & development in the country, therefore it is difficult to expect FDI from the US to increase compared to the Biden administration. Currently, capital outflows are starting to flee the Indonesian equity market again, where yesterday’s Foreign Net Sell of IDR 1.09 trillion (RG market) was recorded, making the YTD foreign net sell position back up to IDR 7 trillion. The rise of USD has made the RUPIAH exchange rate floundered at 15,828 / USD and it is possible that it will soon head towards 16,000-16,300 at the end of the year as the demand for Dollar tends to increase in the 4th quarter. Thirdly, the price of green energy related commodities such as Nickel is expected to fall as Trump is said to be planning to revoke the electric car mandate, while Tesla already produces their EV batteries with Lithium, a Nickel substitute.

• Assessing the current position of JCI which slumped 108pts / -1.44% to 7383.87 which means it broke the Support Neckline of DOUBLE TOP (bearish reversal) pattern, we must warn that there is a possibility of further consolidation; however if there is a technical rebound at the current minor support, investors / traders can take advantage of the Resistance position 7470 – 7560 to secure profits at better prices.

Company News

• FILM: Recorded Profit Increase of 20.8 Percent in the Third Quarter, These are the Supporters
• TLDN: Inaugurating Downstream and Renewable Energy Plants in East Kalimantan
• WIFI: Surge Recorded IDR 152.07 Billion Net Profit in 3Q24, Soaring 339%

Domestic & Global News
Prabowo to Write Off Debts of Farmers to Fishermen, Deputy Minister of Finance: Improving Banking Governance
China will work with US, government says, but more rivalry expected under Trump

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