Today’s Outlook:
• The S&P 500 Index closed 0.16% higher on Wednesday as Technology stocks pared their losses after US Treasury yields stabilized even as the Federal Reserve’s December meeting minutes signaled a slower pace of future rate cuts. The DJIA rose 0.25%, while the NASDAQ Composite slipped 0.1%. The global bond sell-off continued yesterday, pressuring Wall Street stocks across the board and boosting the US Dollar on the back of signs of continued US economic strength dimming expectations for aggressive short-term interest rate cuts. Yields on the benchmark 10-year US Treasury note rose as high as 4.73%, the peak since April 2024, extending Tuesday’s 7 basis points increase. Finally, the US10YT rose 0.2 basis points to 4.687%. The bond sell-off intensified after a CNN report mentioned that US President elect Donald Trump is considering declaring a national economic emergency to provide legal justification for a series of universal tariffs on allies and adversaries. Market participants are aware that since Trump was elected as the latest US president, interest rates have a tendency to continue rising, supported by his policy themes, be it tariffs, tax cuts, or deportations, all of which are inflationary.
• MARKET SENTIMENT: Strong US economic data has weighed on US government bonds in recent weeks, leading investors to reduce expectations of further Federal Reserve rate cuts. The market expects only one rate cut in 2025 at 25bps, while only seeing about a 60% chance of a second cut this year. ADP Nonfarm Employment Change stated that 122k new private sector jobs were added in Dec, lower than both the forecast and Nov. However, Initial Jobless Claims recorded 201k jobless claims in the latest week, lower than consensus 214k and previous week 211k.
• EUROPEAN MARKETS: On the other side of the world, European stocks slumped, where the pan-European STOXX 600 closed down 0.2%, with most regional bourses also in the red. The global MSCI stock index fell 0.12% to 845.95. European government bond yields surged, with the GERMAN 10-year benchmark bond auction hitting a 6-month high yield at 2.510%, compared to 2.07% a month ago; even though German Factory Orders & Retail Sales contracted further in Nov. The 10-year UK bond yield also rose over 11 basis points to 4.82%, the highest since 2008. Today will see German Industrial Production & Trade Balance for Nov as well.
• ASIA MARKETS: CHINA inflation (Dec) will be in the spotlight today, where consensus says CPI will still remain positive at 0.1% yoy, albeit down from previous month’s 0.2%; however PPI is detected to continue deflation at 2.4%, rather than 2.5% in Nov.
• CURRENCY: The DOLLAR INDEX (DXY), which measures the greenback’s strength against 6 other major world currencies including the Yen and Euro, rose 0.29% to 109.02, with the Euro down 0.23% at $1.0315.
• COMMODITIES: OIL prices were pressured by a stronger dollar and after a smaller-than-expected decline in US fuel stocks last week. BRENT crude oil closed down 89 cents, or 1.16%, to $76.23 per barrel. US West Texas Intermediate (US WTI) crude fell 93 cents, or 1.25%, to $73.32. In other commodity corners, GOLD prices rose 0.51% to $2,662.90/ounce, while US gold futures prices closed still up 0.3% at $2,672.40.
• BANK INDONESIA reported that the position of foreign exchange reserves as of the end of December 2024 reached US$155.7 billion. This amount was observed to increase by US$5.05 billion from November 2024 which was valued at US$150.2 billion. This achievement is not only the most significant throughout 2024, but also recorded the highest foreign exchange reserves record after October 2024 which was valued at US$ 151.2 billion. Revenue comes from taxes & services, withdrawal of government foreign loans, and oil and gas foreign exchange receipts. Thus the current position of foreign exchange reserves is equivalent to financing 6.5 months of imports and servicing government foreign debt, and is safely above the international adequacy standard of around 3 months of imports. Today will be awaited data: Consumer Confidence (Dec) and motorcycle sales figures (Dec).
• JCI was in a critical position right at MA10 Support when it closed Wednesday’s trading position (08/01/25) slightly corrected by almost 3pts to 7080.35 accompanied by Foreign Net Sell which still occurred in ALL markets amounting to IDR 353.71 billion. USD/ IDR pushed back up to IDR 16,247/USD due to the DXY staying at a high. NHKSI RESEARCH assesses that the current JCI position is still vulnerable to further consolidation towards the psychological level of 7000, due to the lack of positive catalysts that can enable JCI to break through Resistance 7190-7200. Therefore, facing the turmoil of market dynamics, investors / traders are advised to increase their WAIT & SEE attitude towards US Nonfarm Payroll data, or at least apply wise money-management in the trading plan.
Company News
• PBRX: Here’s the Latest Progress on PBRX’s Recovery
• MCAS: Prepare IDR 90 Billion, M Cash Integration (MCAS) Completes Share Buyback
• RATU: Recently Listed for IPO, Raharja Energi Discloses to Acquire Oil and Gas Block
Domestic & Global News
Government Prepares New Incentives for Natural Resource Exporters Who Bring Dollars Home
China’s Shandong Port, Entry Point for Most Sanctioned Oil, Bans Us-Designated Vessels
Download full report HERE.
