Today’s Outlook:

• The S&P 500 and the Dow Jones Industrial Average both maintained gains and ended marginally higher on Tuesday, extending recent back-to-back bullish swings triggered by renewed hopes that the Federal Reserve will cut interest rates this year. This development pushed the S&P 500 to its highest closing level for 4x in a row, and is its best winning streak since March. For the Dow Jones, it is now on its longest positive run since December 2023, rising for 5 consecutive sessions. The appreciation of the two benchmark indexes came despite Walt Disney’s shares slumping 9.5%, the biggest percentage drop since November 2022, as unexpected gains in its streaming entertainment division were eclipsed by a decline in its traditional TV business and weak box office. Despite the headwinds from Disney, the market in general was still supported by the Nonfarm Payroll report released last week where the results were weaker than expected, thus fueling speculation that the US central bank will cut interest rates. The stock market was also bolstered by declining US Treasury yields, after Fed officials have been fairly consistent in their remarks in recent weeks that a rate cut is likely but the central bank will be cautious in implementing it. Even so far the market seems to be ignoring comments from Minneapolis Federal Reserve President Neel Kashkari that the Fed may need to hold interest rates steady for the rest of the year due to the stalling of the decline in Inflation and strength in the property market. Investors currently anticipate 46 basis points of rate cuts from the Fed by the end of 2024, according to LSEG’s interest rate probability application, with the first pivot in rate cuts seen in September and another in December (compared to 1x forecast before the labor report was released last week). Amidst the lack of economic calendar this week, market participants are indeed inclined to pay more attention to statements from the US central bank, while also still monitoring weekly jobless claims as usual, where Initial Jobless Claims will be released tomorrow with a prediction of 211K (vs previous week 208K).
• ASIA & EUROPE MARKETS: JAPAN reported PMI figures in the Services sector which remained relatively stable expansionary in April. Tomorrow the more important data will come from CHINA which is their Trade Balance which is expected to be in surplus at an upward pace thanks to significant improvements on their Export & Import side. A number of mixed economic indicator figures have emerged from continental Europe. GERMANY, Europe’s number one economy saw their Factory Orders for March drop -0.4% following a -0.8% decline in the previous month, failing to meet expectations of a 0.4% increase. The same concerns also haunted Germany’s Industrial Production sector which was predicted to remain in negative territory for March. On the one hand, they posted growth on the Export & Import side in March resulting in a Trade Balance surplus of EUR 22.3 billion. The faster rolling economy was also detected in the UK Construction PMI in April which was firmly in expansionary territory. Even EUROZONE released more muted Retail Sales data in March, growing a positive 0.8% mom above the projected 0.6%, reversing from the previous month’s minus 0.3%.
• COMMODITIES: OIL prices closed slightly lower on Tuesday amid signs of waning supply concerns, while market participants now turn their focus to US government data on its oil reserve stocks due later on Wednesday. BRENT crude oil futures closed 17 cents lower at USD 83.16/barrel, and US West Texas Intermediate (WTI) crude oil futures closed 10 cents lower at USD 78.38. Prices fell further still after data from the American Petroleum Institute showed a weekly crude stockpile surge of 509 thousand barrels, instead of the 1.43 million barrel reduction they had expected, following a 4.90 million barrel build in the previous week and US fuel last week. Rising inventories, which are usually a sign of weakening demand, have often exceeded analysts’ expectations in recent weeks. Mizuho analysts cautioned that going into the summer driving season it is expected that vehicle fuel inventories will be sufficient. Analysts polled in a Reuters survey expect a decline in US oil and fuel stocks in the next official data from the Energy Information Association (EIA) to be released this Wednesday night at around 21:30 GMT. Crude Oil inventories are expected to drop by 1.43 million barrels while Gasoline inventories will also drop by 1.18 million barrels. Additioally, current global inventories show crude oil and petroleum supplies are 1.1 million barrels per day above estimates in developed economies, according to analysis by energy broker StoneX. Meanwhile, the EIA on Tuesday raised its forecast for world oil and liquid fuels production this year and lowered demand expectations, pointing to good market supplies compared with previous estimates that showed supply shortages. Oil prices found support in Tuesday’s session from the US government’s request to buy more than 3 million barrels of oil for the strategic oil reserve. Oil traders largely ignored rising tensions in the Middle East, where the Israeli military took control of the Rafah border crossing between the Gaza Strip and Egypt and pushed its tanks into the southern Gaza town of Rafah, as mediators struggled to reach a ceasefire agreement.
• INDONESIA: This week will be a short week for the financial sector as it is truncated by 2 holidays for the Ascension of Jesus on Thursday and Friday. However today market participants can still monitor the last data before the long-weekend holiday, namely Foreign Exchange Reserves (Apr.) which will be announced later at around 11.00 am GMT. NHKSI RESEARCH expects JCI to be slow again today as investors/ traders may not be too aggressive in positioning ahead of the holiday. Foreign buying interest has not yet returned to the market, yesterday foreigners were still detected net sell of IDR 714.39 billion, further eroding their YTD position to only IDR 2.6 trillion (all markets).

Company News

• INTP: Net Profit Falls 35.8%
• GOTO: IDR3.2T Share Buyback Next Month
• BNGA: Recorded a Profit of IDR1.68 T

Domestic & Global News
• Sandiaga Mentioned No Levy on Tourism Fund via Airplane Tickets
• US Believes Hamas, Israel Can Break Gaza Ceasefire Impasse; Israeli Forces Cut Rafah Aid Route

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