Biden administration's new stimulus and vaccination targets lifted markets
Major equity indices hit new highs post US Presidential Inauguration as Biden administration focused on supporting the economy rather than raising taxes, as stated by incoming Treasury Secretary Janet Yellen, and reiterated their goal to deliver 1 million vaccinations a day in the first 100 days in the face of worsening coronavirus pandemic. The new administration's vaccine rollout plans include greater use of Defense Production Act to help with vaccine production. Market optimism was despite news of resistance from Republicans to President Biden's proposed US$1.9Tn stimulus package, which is viewed as too sizeable. Adding to positive market sentiment is expectations for strong earnings season, where among the 13% of S&P500 companies that have reported Q4 2020 results, 86% of them reported positive EPS surprise, according to FactSet. Technology stocks led the gains in US stock markets, as reflected in Nasdaq's 4.19% rise this week.
In Indonesia, JCI was down 1.04% this week, after its strong rise in the past 3 weeks, despite sustained foreign inflow of Rp632Bn. Mining (coal and metals),construction, property and basic industries (pulp & paper, poultry) were among the sectors hardest hit by investor profit takings after recent outperformances,while big cap stocks in banking, auto, and consumer sectors outperformed this week. Meanwhile, the bond market reported net inflow of Rp2.5Tn amid rising 10-yr yields (+11bps).
The Week Ahead - IMF World Economic Outlook, Fed Rate Decision
The key economic calendar to watch out for next week includes ECB President Lagarde Speech (Mon 15:45), IMF World Economic Outlook (Tue 20:00), US Durable Goods Order (Wed 20:30), Fed Interest Rate Decision (Thu 02:00), US Initial Jobless Claims and GDP Growth Rate (Thu 20:30), US New Home Sales (Thu 22:00), and US Personal Income & Spending (Fri 20:30).
Equity markets globally have recovered strongly, pricing in V-shaped recoveries in economic growth and equity earnings in 2021, as the worst of the economic fallout from the pandemic seems largely over despite fears over new waves of infections. We expect JCI to continue its recovery, driven by catalysts such as vaccine distribution, Omnibus Law and Indonesia's improving macro outlook, although its valuation has priced-in earnings recovery prospects. Although JCI is getting close to our 2021 JCI target of 6,600 (our bullish case: 7,000), we will still maintain our base case target of 6,600 for now, pending the release of Q1 2021 financial results at end of April and May.
We have been recommending investors to stay defensive since last year with our broad-based ETFs RLQ45 &
Sumber : IndoPremier Investment
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