Today’s Outlook:
• The US stock market recorded another gain on Tuesday (07/11/23), extending its two-year bull run, as a pullback in US Treasury yields boosted Nasdaq megacap stocks by 0.9%; while investors also sought clarity on the Federal Reserve’s interest rate trend. The S&P 500 had seven consecutive days in the green, while the Nasdaq recorded eight consecutive sessions of gains; both are their longest streaks in two years. The Dow rallied for seven consecutive sessions, the longest since 13 consecutive green sessions in July. The benchmark 10-year Treasury note yield was on pace for its fifth decline in six sessions on expectations the Fed is done with its rate hike cycle. Yields extended losses after a solid auction of USD 48 billion in 3-year notes with auctions of the 10-year note and 30-year bond due later this week. Expectations that the Fed’s rate hike cycle is at an end have increased in recent days, but the market remains sensitive to the possibility of more hikes, considering the latest US 3Q23 GDP release came in at 4.9% yoy proving a strong economic performance. As such, central bank officials have been cautious in comments on the future rate path. However, markets are pricing in a 90.2% chance the Fed will once again hold rates steady at its December policy meeting, up from 68.9% a week ago, according to CME’s FedWatch Tool.
• COMMODITIES: The Energy sector was the worst performing sector on Tuesday’s trading session, down 2.2% as Crude Oil prices fell over 4% to their lowest point since late July, amid demand concerns and a strengthening Dollar. Mixed Chinese economic data weighed on global demand, while rising Exports from OPEC producing countries by 1 million barrels/day helped erase concerns about inventory deficits. Brent oil (London) closed below USD 84/barrel or down 4.2% for the first time since Hamas attacked Israel on 7Oct.
• On its demand perspective, CHINA’S oil imports in October showed a high increase, but total exports of goods & services contracted deeper than expected, making China’s Trade Balance surplus a little further off than expected. This explains that China’s economic outlook will continue to weaken due to eroding demand from their export destinations, namely Western countries. Speaking of Exports – Imports, last night the US also followed up with their Trade Balance (Sept) report which resulted in a deficit of USD 61.5 billion, larger than forecast and the previous period which was around below USD 60 billion. However, the value of Exports – Imports managed to increase.
• EUROPEAN MARKETS: Eurozone recorded PPI (Sept) at -12.4% yoy deflation, more or less in line with forecast at – 12.5%, deflation deepened from -11.5% in the previous month. This seems to be explained by the German Industrial Production (Sept) data, which plummeted further on both a monthly and annual basis, as well as the Germany Construction PMI (Oct) index whose figures slipped further into contraction territory. Later in the day, German CPI (Oct) will be monitored which is expected to cool further to 3.8% yoy, from 4.5% in Sept.
• ASIA MARKETS: Indonesia reported Foreign Exchange Reserves (Oct) at USD 133.1 billion, although down from the previous month’s figure of USD 134.9 billion (due to government external debt repayment and spent on Rupiah stabilization efforts), this figure is safe enough to cover 5.9 months of export financing and still above international standards. Today, markets will look forward to the release of the Consumer Confidence index (Oct) around 10.00 AM where the actual figure will be compared to the previous position at 121.7.
• JCI looks quite unsettled approaching the 6900 short term Resistance area, however this MA20 Support test consolidation still looks reasonable. The lethargic mood in the market was triggered by the reddening Asian market and Indonesia’s recent 3Q23 GDP economic outlook which turned out to be weaker than expected. In response to JCI’s current position, NHKSI RESEARCH advises market players to wait and see for the breakout of the crucial Resistance level, as this will pave the way for JCI to 6950-7000 as the psychological barrier.  

Company News
• INDY : Spent USD104.9 Million CapEx by 3Q23
• DEWA: Will Hold Private Placement
• SMAR: Sales Declined 14.25% as of 3Q23

Domestic & Global News
• IDR 400,000 El Nino BLT When Will It Be Disbursed? Minister of Finance Sri Mulyani Announces Disbursement Schedule to Recipient Accounts
• Central Bank Interest Policy to Curb US Inflation? Minneapolis Fed President Speaks on Data

Download full report HERE.