Today’s Outlook:
• US MARKET: The Nasdaq closed above 23,000 for the first time on Wednesday, driven by a rebound in tech as Nvidia chief executive Jensen Huang talk up AI-led chip demand and the Federal Reserve’s latest meeting pointing to further rate cuts ahead. At the close of NYSE, the benchmark S&P 500 rose 0.6% to hit a record close of 6,754.83. The tech-heavy Nasdaq Composite 1.1% to end above 23,000 for the first time ever, while the blue-chip Dow Jones Industrial Average 0.01%.
With a prolonged shutdown leading to the delay of several key economic indicators from the U.S. government, traders have had to turn to alternative data sources to check in on the health of the American economy. These measures dented sentiment in the previous session, especially a New York Federal Reserve survey displaying a deterioration in future expectations and rising projections for inflation.
Most Federal Reserve policymakers suggested that further rate cuts would appropriate, driven by a softening labor market, though uncertainty about how low rates should ultimately fall and ongoing inflation concerns muddying the consensus on deep rate cuts, according to the minutes of the Federal Reserve’s 16–17 Sept. meeting released Wednesday. The path to deeper cuts is paved with uncertainty amid differing views on where the neutral rate and lingering concerns about inflation running above target. Some ultra dovish voting Fed members such as Federal Reserve Governor Stephen Miran, who backed a 50 bps cut last month, believe the Fed has ample room for deep cuts.
• EUROPEAN MARKET: European shares climbed to record highs on Wednesday, powered by strong gains in French and Spanish stocks, and steelmakers rallied after the EU unveiled plans to slash steel import quotas.
The pan-European STOXX 600 was up 0.8%, closing at its highest level, while French stocks jumped 1.1% and Spanish stocks touched their highest mark since 2007. Germany’s DAX closed at a near three-month high.
France’s political uncertainty remained centre stage, as caretaker Prime Minister Sebastien Lecornu struck a cautiously optimistic tone, suggesting that a budget deal could be reached by year-end – potentially averting a snap election. On the macro front, Germany’s economy ministry nudged up its 2025 growth forecast on Wednesday, now expecting a modest 0.2% expansion, up from zero, citing signs of a gradual recovery. Steelmakers surged higher after the European Commission proposed slashing tariff-free steel import quotas by nearly half, sending shares of ArcelorMittal, Aperam, Thyssenkrupp and SSAB up.
•ASIAN MARKET: Most Asian stocks retreated on Wednesday with Hong Kong shares leading losses on a drop in technology stocks, while a stellar rally in Japanese markets now appeared to be cooling. Regional trading volumes remained muted on account of market holidays in China and South Korea. Asian markets took a weak lead-in from Wall Street, which fell from record highs amid a pullback in technology stocks, especially those linked to chipmaking, cloud services, and artificial intelligence.
Hong Kong’s Hang Seng index was the worst performer in Asia on Wednesday, losing 1% in morning trade on losses in technology stocks. Japan’s Nikkei 225 index was flat, while the TOPIX index rose 0.7%. Both indexes traded below record highs hit this week, after fiscal dove Sanae Takaichi was elected leader of the country’s ruling Liberal Democratic Party.
• GOLD : Against such an unclear backdrop, gold prices have soared above USD 4,000 per ounce for the first time, as market participants like private investors and central banks seek the relative safety of the yellow metal. Bullion has surged by over 50% so far this year, posting a series of fresh all-time peaks along the way. It is now on track to jump to its best year since 1979.
• OIL & COMMODITIES: Oil prices fell in early trade on Thursday after Israel and Hamas agreed to the first phase of a plan to end the war in Gaza, weighing on oil’s war risk premium and pushing investors to sell.
Brent crude futures were down 51 cents, or 0.77%, at USD 65.74 a barrel by 00.02 GMT. U.S. West Texas Intermediate crude fell 55 cents, or 0.88%, to USD 62. The war in Gaza has supported oil prices as investors have weighed the potential risk to global oil supply if the war were to develop into a wider regional conflict. Prices had gained around 1% on Wednesday to reach a one-week high after investors viewed stalled progress on a Ukraine peace deal as sustaining sanctions against Russia.
• INDONESIA: The JCI closed slightly lower by -0.04%, ending in the red zone at 8166.03. Keep an eye on banking stocks, especially if they begin to reach their oversold support areas, as current valuations appear quite attractive for accumulation. For those looking to take a more aggressive approach, pay attention to momentum and sector rotation, as well as conglomerate group stocks that carry strong narratives and potential continuation trends. However, if conglomerate stocks start to break below their 20-day moving average (MA20), it’s advisable to reduce position weights. Meanwhile, if a pullback continues in gold-related commodity stocks, they may present short-term trading opportunities once signs of weakness begin to appear.
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