Morning Briefing: Beside U.S, Investors Attention Widely to Europe

World Bank Annual Report (Photo Credit : World Bank)

JAKARTA (TheInsiderStories) – Good Morning. Today, the investors still waiting for the further development on the global economic situation followed recent development in United States (U.S), Europe and China.

The trade tension between U.S and China continued to worsen with President Donald Trump making a veiled threat to the World Trade Organization (WTO) on Monday (02/07).

Also weighing on sentiment is the July 6 deadline when the U.S government is ready to charge China’s US$34 billion worth of goods. Global equity markets have been jittery ahead the deadline in the mean time, Chinese government itself has vowed to take similar steps towards U.S products.

European Union has warned the U.S, the imposition of tariffs on imported cars and auto parts will endanger the U.S auto industry itself. The U.S move is also likely to lead to counter-action by the country’s trading partners by imposing a $294 billion tariff on state goods.

Investors also focused on the development of Facebook issues. On Tuesday, Facebook shares fell 2.35 percent after local media reported that a federal investigation into data breaches linked to Cambridge Analytics was expanded and would include more government agencies.

On the other hand, the dispute over migration has threatened to overthrow Germany’s chancellor Angela Merkel’s fragile government coalition but in a breakthrough on Monday night when home secretary of state decided to resign after the discussions.

Investor also pay attention to the European Central Bank’s (ECB) careful steps. As if not wanting to repeat the same ‘mistake’, the ECB tends to show a cautious or dovish attitude in determining the direction of its monetary policy in the midst of tightening by other central banks.

From domestic side, today Indonesia President Joko Widodo will meet President of World Bank Jim Yong Kim to discuss the latest economic developments and IMF-World Bank Meeting in Bali on October of this year.

Yesterday, the movement of the three major U.S stock indices in Wall Street slumped in late trading, weighed down by Apple and Facebook shares. The Dow Jones Industrial Average closed down 0.54 percent at 24,174.82, the S&P 500 fell 0.49 percent at 2,713.22, while the Nasdaq Composite ended down 0.86 percent at 7,502.67.

While, European stocks rallied on Tuesday after Merkel’s conservative party resolved a dispute over migration and eased investor anxiety, despite issues of trade war. The benchmark European benchmark stock index, the Stoxx 600, ended up 0.8 percent, with Germany’s DAX rising 0.9 percent.

In the local market, some analyst saw the lack of positive sentiment still make the movement of Jakarta Composite Index (JCI) to be limited today. They said, index will tend to weaken this day as seen from some indicators indicating bearish signal.

The analyst said, some sentiments that could affect the JCI is the correction of the Rupiah due to the strengthening of the U.S dollar against the global currencies. This morning Rupiah in the spot market opened up 47 points or 0.33 percent to Rp14,350 per U.S dollar.

The rupiah closed lower at the end of the second day of trading on Tuesday (03/07), although at the same time the U.S dollar index was corrected. Yesterday, the local currency closed down 7 points or 0.05 percent at the level of Rp14,397 over the greenback, the weakest since October 2015.

As if not wanting to give up, the movement is able to strengthen and still ends up in the range of Rp14.300 level today. Along with it, U.S crude oil prices tend to move flat on Wednesday morning, following a report on the decline in the country’s stocks.

On Tuesday, the price of West Texas Intermediate (WTI) oil for August 2018 contract traded at $74.26 per barrel, after expiring at $74.14 per barrel on the New York Mercantile Exchange.

Brent oil for September delivery rose 46 cents and ended at $77.76 a barrel on the London-based ICE Futures Europe exchange. This global benchmark crude traded at a premium of $6.17 against WTI for the same month.

U.S oil prices traded around the closing price after the American Petroleum Institute reported a drop in crude inventories by 4.51 million barrels last week, while supplies in Cushing, Oklahoma shrank 2.6 million barrels.