JAKARTA (TheInsiderStories) – Good Morning. The Government of Indonesia announced will revise a number of bilateral trade agreements with partner countries to address trade wars between the United States (U.S) and China, said Finance Minister Sri Mulyani Indrawati onTuesday (10/07).

She said, the evaluation also to gain maximum profit from trade agreements and to adjust the benefit for Indonesia and its partner. Indrawati stated, President Joko Widodo has asked his ministers to immediately finalize the evaluation of the bilateral agreement.

In the first five months of this year, Indonesia’s exports to the U.S recorded US$7.43 billion, or up 3.53 percent over the same period last year. The value of exports to the U.S could be eroded along with news that the U.S is evaluating about 124 Indonesian export products, including textiles, plywood, cotton, and some fishery products such as shrimp and crabs.

Evaluation is conducted to determine what products are still eligible to receive generalized system of preferences (GSP). If the GSP for Indonesia is eliminated then the cost of Indonesian exports to the U.S becomes more expensive.

Yesterday, the U.S Trade Representative’s office officially released the list of proposed merchandise such as clothing, television components and refrigerators, as well as other high-tech items, but eliminates some products such as cell phones.

The official Robert Lighthizer said in a statement, it had no choice but to move forward on the new tariffs after China failed to respond to U.S concerns over unfair trade practices and misuse of intellectual property. High-level talks between the two countries that began in May failed to produce a breakthrough to stop a trade war.

The U.S government on July 6, imposed a 25 percent duty on imported goods from China worth of $34 billion. In addition, the U.S is considering a separate import duty worth more than $16 billion for Chinese goods after the public hearing later this month.

Furthermore Trump last month asked the Trade Representative’s office to identify Chinese goods worth $200 billion that could impose a 10 percent import tariff.

The International Monetary Fund has warned that a massive trade war could undermine the strengthening of the global economy. But Trump did not retreat, arguing that unfair trade practices in China hurt US workers.

Hows investor reaction? After suffer for several week on trade war dispute, The S&P 500 index recorded its highest closing level since February 1, the day before the market started a sharp sell-off, after U.S’s PepsiCo’s strong performance boosted optimism about earnings season.

The Dow Jones Industrial Average climbed 143.07 points, or 0.58 percent, to 24,919.66, the Nasdaq Composite index advanced 3.00 points, or 0.04 percent, to 7,759.20, while The Standard & Poor’s 500 Index climbed 9.67 points, or 0.35 percent, to 2,793.84.

The S&P 500 has gained about 3 percent in the past four sessions, with positive sentiment on the economy as well as earnings helping offset concerns about rising trade tensions between the U.S and China. The earnings report is expected to be key for investors in the coming weeks as the U.S financial reporting period is very high.

At the same time, European stock markets continued rally because the focus of investors shifted from the war of trade to the earnings reporting season of the issuers are expected to show solid results. The Stoxx Europe 600 Index closed up 0.43 percent, or 1.66 points, to 386.25, registering a six-day rally in a row, while the British FTSE index advanced 0.1 percent.

Meanwhile, the petroleum sector was the main driver of the Stoxx index after closing up 1.4 percent. Crude oil prices rose on concerns of potential supply shortages following a strike plan for oil workers in Norway.

Brent oil futures for September 2018 contract closed up 1.01 percent or 0.79 points to as low as $78.86 per barrel on the London-based ICE Futures Exchange. While, West Texas Intermediate oil moved down 0.12 percent or 0.09 point to $74.02 a barrel this morning after closing at $74.11 on Tuesday.

Contrary to U.S and Europe market, this morning majority of other stock indexes in Southeast Asia flushed, with FTSE Malay KLCI index (-0.38 percent), Singapore FTSE Straits Time index (-1.40 percent), Japan’s Topix and Nikkei 225 fell 1.40 percent and 1.65 percent, respectively.

Meanwhile, South Korean Kospi index fell 0.75 percent, the Shanghai Composite index and CSI 300 China each slipped 1.91 percent and 1.94 percent.

The same condition hampered local market. This morning, the Jakarta Composite Index (JCI) weakened 0.88 percent or dropped 51 points to 5,830.28. Net sells are occurring throughout the market once investors hear about the U.S will impose additional tariffs after efforts to negotiate solutions to trade disputes between the two countries failed to reach an agreement.

Nine sectors weakened in early trading this morning. Only the construction sector is still up 0.31 percent, financial sector fell the most at 1.66 percent, consumer goods sector followed with a 0.95 percent decline, infrastructure sector weakened 0.97 percent while manufacturing and miscellaneous industries fell 0.83 percent and 0.80 percent, respectively.

Same condition colored the Rupiah movement. Today, the local currency weakened for the first time in three trading days as investors reduced their speculation against risky assets. Rupiah weakened 19 points or 0.13 percent at the level of Rp14,386 per U.S dollar.

Yesterday, he rupiah ended down 37 points to Rp14.367 over the greenback. On Monday (9/7), the rupiah ended up 0.31 percent or 45 points at Rp14,330 against the U.S dollar.

Email: linda.silaen@theinsiderstories.com