Today’s Outlook:
• The Dow Jones Industrial Average closed in a high on Friday (04/10/24) and the NASDAQ ended with a gain of more than 1% on the back of a stronger -than-expected NONFARM PAYROLL report reassuring investors concerned that the US economy is still far from recession. The above market sentiment drove up small-cap and financial sector stocks, with the Russell 2000 index up 1.5% and the S&P 500 financial index up 1.6%. The DJIA gained 341.16 points, or 0.81%, to 42,352.75; the S&P appreciated 0.90%, while the NASDAQ Composite jumped 1.22%. On a weekly basis, the three major Wall Street indices only recorded slight gains of around 0.1% – 0.2% following concerns over rising tensions in the Middle East.
• MARKET SENTIMENT :
– US NONFARM PAYROLL stated that job creation in the US for the public sector increased by 254k in September which is the highest number in 6 months (much higher than the prediction of 147k), and the Unemployment Rate fell to 4.1%. While this was a good surprise, it could slow down the pace of Fed rate cuts. In response to the data, Morgan Stanley issued a statement that they expect rate cuts of 25bps each at the November and December FOMC meetings. Wells Fargo also believes that the US economy will undergo a soft-landing scenario rather than a recession. Chicago Fed’s own President Austan Goolsee appreciated the NONFARM PAYROLL report and said it is still appropriate for the Fed to cut rates a lot over the next 12 to 18 months. As such, market participants reduced bets on a 50 basis point reduction at the Federal Reserve’s November 6-7 meeting. Investors now estimate a mere 8% chance of a 50 bps rate cut, slipping considerably from around 31% earlier on Friday, according to the CME FedWatch Tool. The Fed has started the monetary easing cycle last month with a 50 basis points cut in the Fed Funds Rate.
– MIDDLE EAST CONFLICT: The S&P Energy Index rose 1.1% on Friday as Oil prices rose. With the Middle East Conflict, the index jumped 7% during the week in the biggest weekly percentage gain since October 2022. This was triggered by comments from US President Joe Biden who said that if he were in Israel’s shoes, he would think of alternatives to attacking Iran’s oil fields, adding that he thought Israel had not concluded how to respond to Iran’s missile barrage last week.
– EARNINGS SEASON: Third quarter earnings announcements for S&P 500 companies are expected to begin unofficially this week. Market participants are highlighting the reports of large financial companies such as JP Morgan Chase, Wells Fargo, and BlackRock due October 11. Optimistic investors hope that their performance will be able to justify the increasingly high valuations in the stock market. The S&P 500 has skyrocketed 20.6% so far this year.
– A US PORT WORKERS’ STRIKE appears to be over after their union and a group representing major ocean shipping companies reached an agreement, which is expected to result in wage increases of around 62% over 6 years.
• COMMODITIES: CENTRAL OIL prices rallied on Friday and closed with their biggest weekly gain in over a year on the growing threat of WAR across the MIDDLE EAST, although the gains were limited as US President Joe Biden prevented Israel from targeting Iranian oil facilities. Oil prices briefly surged 2% but closed lower; with BRENT crude up 43 cents, or 0.6%, to USD 78.05/barrel, while US WTI lifted 67 cents, or 0.9%, to USD 74.38/barrel. ISRAEL has vowed to attack IRAN for launching a barrage of missiles into Israel on Tuesday, after Israel killed the leader of Iran-backed Hezbollah a week ago. The events led oil analysts to warn about the potential escalation of a wider war in the Middle East. On Thursday, benchmark oil prices jumped more than 5% after Biden confirmed that the US was conferring with Israel over whether it would support strikes on Iran’s energy infrastructure. On a weekly basis, Brent crude jumped more than 8%, the highest in a week since January 2023. US hot WTI boiled 9.1% last week, the highest since March 2023.
• Meanwhile from another commodity angle, world GOLD prices slipped 0.3% at the close of trading on Friday, to USD 2647.52/ounce, as stronger-than
-expected US jobs data boosted the US DOLLAR, dashing hopes of a more aggressive interest rate cut from the Fed next month. Whereas last week the price of Gold had touched a record high of USD 2685.42. The same reason for the strengthening of the USD also makes Oil prices shrink again because the high US DOLLAR can discourage non-US country buying interest.
• NHKSI RESEARCH warns JCI investors/traders to think about the possibility of JCI still having to resort to Support 7400 after last week failed to keep JCI above Support 7500 level let alone stay above the lower channel support 7550, which has supported this uptrend since June bottom. Last Friday’s Closing position of 7496 after falling 47.7 pts / -0.63% also confirmed below the important MA50 support. JCI seems unable to withstand the onslaught of foreign selling that has hit over the past week amounting to IDR 5.07 trillion (RG market), making Foreign Net Buy YTD only remaining IDR 216.62 billion. Inevitably, the RUPIAH exchange rate position slumped further to 15480 / USD, especially after the US Nonfarm Payroll report came out at the end of last week. The flight of foreign funds is expected to still go to China & Hong Kong exchanges which strengthened greatly last week driven by stimulus sentiment poured out by the Chinese government, although the potential for escalation of the Middle East Conflict remains haunting.
Company News
• CRSN: Carsurin Establishes Mineral Business, Examine the Details
• LABA: Green Power Unveils Land Expansion Plan, Still Waiting for Approval
• TPIA: Prajogo Pangestu’s Chandra Asri (TPIA) Acquires Shell Energy and Chemicals Park
Domestic & Global News
Prabowo Plans to Establish a National Investment Fund
Europe Falters on Anti Deforestation Laws
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