Food for thought

While the markets have been ranged bound, held ransom by S&P 500, 2 markets might give positive surprises. Since July 2023, investors expected interest rate to ease but have been disappointed by the hawkish Fed undertone. Historically, monetary easing were prompted by recessions but this time round, central banks are looking to cut rates in response to easing inflationary pressure.

Chart 1: US Core inflation rate (Source: Trading Economics)

Two markets have come into our radar which we believe would provide positive trading opportunities, namely Indonesia and Japan.

Indonesia

Government’s intention to increase the debt to GDP ratio to improve infrastructure spending, increasing FDI, transformation from commodity to manufacturing and moving up the value chain.

Chart 2: Foreign direct investment IDR trillion(Source: Trading Economics)

Japan

Expectation of stability in the Yen, improving corporate business sentiment and business outlook.

Chart 3: Japan Business confidence (Trading economics)