Today’s Outlook:

• BRACE FOR ANOTHER SELL-OFF? US stocks plunged on Friday after closely watched employment data showed labor market momentum slowed more than expected, suggesting a challenging path for the US to reach a soft landing, where the Fed is able to cool inflation without significantly damaging economic growth. The S&P 500 fell sharply on Friday, experiencing its worst week since 2023. The S&P 500 fell 1.7%, and recorded its worst week since March. The Tech-focused NASDAQ Composite slumped 2.5%, and the 30-stock Dow Jones Industrial Average fell 401 points or 1%. The US economy added fewer jobs than expected in August, but improved from July’s sharply revised figure, according to Labor Department data; where this data could influence the next policy decision by the Federal Reserve. NONFARM PAYROLLS totaled 142,000 last month, up from a sharply revised figure of 89,000 in July. Economists had expected a figure of 164,000, up from July’s preliminary figure of 114,000. Friday’s data release also showed the US Unemployment Rate came in at 4.2%, compared to July’s figure of 4.3%. This rate was in line with forecasts. On a monthly basis, average hourly wage growth also increased to 0.4% after contracting by 0.1% in July. Economists think that the weakening labor market provides enough room for the Fed to ease monetary policy, but perhaps not by a significant amount; thus making the percentages more in favor of a 25bps rate cut. Fed Governor, Christopher Waller, on Friday called for dovish comments for the US central bank to start cutting rates later this month, adding that upcoming economic data (Inflation) will determine the size and pace of the rate cut.

• MARKET SENTIMENT: Barclays economists stated that they anticipate a 25bps rate cut at this month’s FOMC Meeting, followed by two more cuts of similar magnitude at the remaining two FOMC Meetings this year; and forecast a total of 75bps rate cut for next year.

• FIXED INCOME & CURRENCY: The prospect of global monetary policy easing drove bonds higher, with 10-year US TREASURY yields hitting a 15-month low and 2-year yields hitting their lowest level since March 2023. The 10-year yield was last at 3.734% and the two-year at 3.661%, bringing the curve close to its steepest level since mid-2022. Falling yields prompted further easing, from the liquidation of Yen carry-trade positions causing the US DOLLAR to slide as deep as 141.75 Yen on Friday. The Euro after briefly hitting a high of USD 1.1155 on Friday.

• EUROPE & ASIA MARKETS were both hit by a massive sell-off at the close of last week. The STOXX 600 regional index, which tracks the performance of stocks across a range of EUROPEAN sectors, fell 2.5%, recording its biggest weekly decline since the sell-off in early Aug. The NIKKEI also recorded a nearly 6% slide last week on top of sentiment that a stronger Japanese yen would weigh on exporters’ business. The MSCI Asia-Pacific ex-Japan index slipped 2.25% last week. It is expected that a tsunami wave will hit global stock markets today, digesting the weak US labor data final released last Friday. Consumer price data (CPI) from CHINA due on Monday is expected to show that the Asian giant is still struggling with deflation, with producer prices forecast to fall 1.4% annually in August.

• INDONESIA: The JCI closed up 40.8pts / +0.53% last Friday to 7721.85, again recording a new all-time high Closing point, but still within the confines of its uptrend Resistance. On a weekly basis, JCI greened 0.36% on the back of IDR 3.42 trillion worth of foreign buying (RG market), thus making YTD foreign spending a positive buy of IDR 1.64 trillion (RG market). This positive sentiment should be maintained especially if the strengthening of IDR stays below 15400/USD as is currently the case, where in the past week USD has weakened 1.06%. However, given the unfavorable global regional sentiment, NHKSI RESEARCH must remind investors/traders that a selling wave might hit JCI as it is positioned along the Resistance. Brace yourself for a test of the closest Support 7650, which if it doesn’t hold then it will head towards 7550 as the second cushion.

Company News

• INKP: Intent to Pay, Here’s the Rating of Sinarmas Group’s Issuer
• DOID: Delta Dunia Transfer 70.6 Million Treasury Shares
• MFIN: Mandala Multifinance seeks approval to distribute bonus shares 1:1

Domestic & Global News
Minister of Finance Draft Regulation on Tobacco Products, Government Asked to Consider Farmers’ Side
VW Boss Says European Market Shrinking Amid Tougher Competition

Download full report HERE.