Inflationary pressures are easing in Indonesia. Oil prices rise amid falling inventories

On the last day of 2024, the Dow Jones Index (US30) was down 0.07% (for 2024 +12.80%). The S&P 500 Index (US500) fell by 0.43% (for 2024 +24.01%). The Nasdaq Technology Index (US100) decreased by 0.87% (for 2024 +27.01%). In the US, markets are awaiting Friday’s US Manufacturing Activity Index data for December to determine the market’s direction and assess the health of the US manufacturing sector. The December manufacturing sector business activity index is expected to decline by 0.2 to 48.2.

The Mexican peso faced negative factors related to the strength of the US dollar, which was supported by rising yields and demand for the safe-haven currency. In addition, low liquidity during the holidays further exacerbated losses, leaving the peso among the worst-performing emerging market currencies in 2024, with a year-to-date decline of nearly 19%.

European markets were not trading on Tuesday. Germany’s DAX (DE40) gained +18.72% over 2024, France’s CAC 40 (FR40) closed down 1.99% for the year, Spain’s IBEX 35 (ES35) gained 13.88% for the year, and the UK’s FTSE 100 (UK100) added 5.85% over the past year.

WTI crude oil prices rose above $72 a barrel on Thursday, in the first session after the New Year’s break, following the release of a report on a decline in US crude inventories. The API data showed a 1.4 million barrel decline in US crude inventories for the week ended December 27. If the official data is confirmed today, it would mark the third consecutive weekly decline.

Asian markets were mostly up on Tuesday, December 31. Japan’s Nikkei 225 (JP225) was not trading (+19.85% for 2024), China’s FTSE China A50 (CHA50) was down 1.03% (+19.50% for the year), Hong Kong’s Hang Seng (HK50) added 0.09% (up +19.49% for the year), and Australia’s ASX 200 (AU200) was also not trading on December 31 (up +7.18% for 2024).

China’s central bank (PBoC) injected 1.7 trillion yuan ($233 billion) into the economy and financial markets in December, boosting liquidity at the end of the year. This followed 800 billion and 500 billion yuan injections in the past two months, with a new instrument introduced in October. The cash injections underscore the PBOC’s accommodative stance after the country’s top leaders pledged to provide additional “moderately loose” policy support for an economy facing the threat of escalating trade tensions.

The Australian dollar (AUD) climbed above US$0.62 on Thursday, recovering from two-year lows as higher commodity prices lent support, favoring Australia’s position as a net exporter of basic resources.

The New Zealand dollar (NZD) strengthened slightly as traders anticipated a recovery in China, New Zealand’s main trading partner, following President Xi Jinping’s pledge last Tuesday to implement more active policies to stimulate growth. However, private data showed an unexpected slowdown in factory activity growth, coinciding with a growth slowdown indicated by official data released earlier this week. The currency remained near two-year lows under pressure from dovish expectations from the Reserve Bank of New Zealand.

Indonesia’s annual inflation rate for December 2024 was 1.57%, little changed from November’s three-year low of 1.55%. The latest result was slightly below market expectations of 1.6% but remained within the central bank’s target range of 1.5% to 3.5%. Core inflation, excluding managed and volatile food prices, held steady at 2.26%, remaining at a 16-month high but slightly short of the expected 2.28%.

Singapore’s GDP grew at an annualized rate of 4.3% in the fourth quarter of 2024, slowing from the 5.4% growth in the third quarter but beating market expectations of 3.8%. For the full year, the economy grew by 4%, exceeding the 1.1% growth seen in 2023 and beating forecasts of 3.5%.