Wall Street June 4, 2019

𝐉𝐮𝐧𝐞 𝟓, 𝟐𝟎𝟏𝟗

* 𝐃𝐉𝐈𝐀 𝐜𝐥𝐨𝐬𝐞𝐝 𝐮𝐩 𝐛𝐲 𝟓𝟏𝟐𝐩𝐭 𝐨𝐫 𝟐.𝟏%, 𝐒&𝐏𝟓𝟎𝟎 𝐛𝐲 𝟐.𝟏%, 𝐚𝐧𝐝 𝐍𝐚𝐬𝐝𝐚𝐪 𝐛𝐲 𝟐.𝟕%

* 𝐃𝐨𝐰 𝐅𝐮𝐭 𝐩𝐨𝐢𝐧𝐭𝐞𝐝 𝐟𝐨𝐫 𝐡𝐢𝐠𝐡𝐞𝐫 𝐨𝐩𝐞𝐧 𝐭𝐨𝐝𝐚𝐲

Afternoon,

The DJIA index yesterday (4/6) closed higher by 512pt or 2.1% at 25.332pt while S&P500 and Nasdaq by 2.1% and 2.7%, respectively. The uptick was mainly connected to the Federal Reserve chairman Jeremy Powell comment that the US central bank, being aware of the latest development, would do what is must do to sustain expansions. In response the continuing trade negotiations between the US and China on February this year, the Fed had revised down the frequency it had had planned to hike the FFR to 2 times from previously 3 times in 2019. Next FOMC meeting will be on June 18-19.

In addition,  the US president Trump threat to charge 5% levy on all Mexican imports is expected to face resistance from the Republican members of Senate. This factor added to the buying spree on yesterday trading sessions in Wall Street.

Cheers,

𝐓𝐡𝐞 𝐉𝐂𝐈

𝐌𝐚𝐲 𝟐𝟗 𝐜𝐥𝐨𝐬𝐢𝐧𝐠 𝐚𝐭 𝟔,𝟏𝟎𝟒𝐩𝐭, +𝟏.𝟐%

Afternoon,

Against our and consensus’ estimates, the Jakarta Composite Index opened in the green and moved its way up to close by 71poins or 1.2% higher to 6,104pt. Investors’ perception on Indonesia political climate has been the trigger factor, in our view. The government is perceived to be in control over rival Prabowo-Sandi supporters’ protests on election frauds, with medias reporting that the police has actively arrested those who are presumed assaulting the incumbent president and his allies. Presidential election fraud charges were submitted by the Prabowo-Sandi team to the Constitutional Court on May 24, while decision on the case will be announced on June 28.

Meanwhile, counters under our coverage that experienced significant rebound on May 29, include those of TKIM at IDR9,000  (+IDR800 or 9.8%), UNVR at IDR43,500 (+IRD1,000 or 2,4%), MAPI at IDR880 (+IDR40 or 4.8%), and ASII at IDR7,200 (+IDR125 or 1,8%). On May 29 the last trading day before Eid long holiday, foreign net buy was recorded in the amount of IDR332bn and trading value of Indonesia equities reached IDR10.8tr.

At the other end, Wall Street underwent another slide on May 29 with the DJIA closed by 221pt lower or 0.9% to 25.126pt mainly to continue reflecting investors’ worry on the trade war between the US and China which officially started early December last year. Contrary to consensus’ belief at the time, China has not acted strategically and would go steps further to ensure trade deal is fair. For example China threatened it would cut off rare earth minerals as a countermeasure in the escalated trade battle. The materials are crucial to the production of iPhones, among others. The official newspaper of the Communist Party of China, People’s Daily, wrote in its commentary column the following title,  “We advise the U.S. side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!”

Cheers,