Russian Presiden Vladimir Putin Met U.S's National Security Adviser John Bolton in the Kremlin - Photo by Russian President Office

JAKARTA (TheInsiderStories) – Good Morning. Investors eyes now focused on the meeting of Unite States’s (U.S) President Donald Trump and Russian President Vladimir Putin following Putin’s closed-door meeting with U.S. National Security Advisor John Bolton at the Kremlin on Wednesday (27/06).

After the meeting, Kremlin’s staff Yuri Ushakov said, both leaders will meet in a third country and the date and venue to be announced today. The summit, he adds, is expecting comes out with a joint statement outlining further steps from both sides to improve bilateral relations and joint actions in the international arena to ensure global stability and security, in particular the Syria issue and its humanitarian aspect.

In the statement released on June 27, Putin pointed out that Russian-U.S relations are not at their best due to sharp domestic political strife in the Trump’s country. But, he expects with the visit your visit U.S National Security Adviser John Bolton to Moscow gives hope that the both leaders make at least the first steps towards restoring full-fledged relations between the country.

On the other hand, Bolton expects that Trump and Putin to improve Russian-U.S relationships. He continued, President Trump feels very strongly the differences view of the both leaders and the meeting is expecting was good for stability in the world.

In Indonesia, the results of regional election bring a new confidence to investors illustrated by the strengthening of the Jakarta Composite Index (JCI) at the opening at the stock market. This morning JCI open in the teritory positive, climbed 0.07 percent to 5,791.58.

But some analyst predicts, the weakening still overshadow the movement of JCI today. In domestic market, investors now waiting on the Bank Indonesia’s (BI) meeting on their monetary stance over the pressures from global. The central bank will announce their stance on Friday.

Global Market

Again, uncertainty in the global market make investors continue to sell-off its assets, U.S and Asian’s stock indexes closed lower at the end of trading. The market remained uneasy with Trump’s hard-line approach to getting a better deal. His attitude is feared not only will backfire but also harm the global economy.

The Dow Jones Industrial Average closed down 165.52 points, or 0.68 percent, to 24,117.59. Meanwhile, the Standard & Poor’s 500 Index fell 23.43 points, or 0.86 percent, to 2,699.63 (its lowest closing level in a month) and the Nasdaq Composite fell 116.54 points, or 1.54 percent, to 7,445.09.

Meanwhile, Asian stocks slid to the lowest level in nine months in trading this morning. The MSCI Asia Pacific stock index, excluding Japan, fell 0.25 percent to a nine-month low in early trading, while Japan’s Nikkei index was down 0.30 percent.

In China, markets that have been weighed by worries about the yuan and trade disputes with the United States have kept investors on course for the last six months of pebbles this year. That would keep traders focused on Chinese stocks hit by Wednesday’s sell-off, with the blue-chip index posting its worst fall in more than a year.

On the other hand, crude oil prices surged to their highest level since 2014 on Wednesday after U.S crude stocks fell sharply in nearly two years. Risks on supply from Iran to Venezuela have boosted the crude market, even as the Organization of Petroleum Exporting Countries (OPEC) and its counterparts like Russia pledged to ease production limits.

West Texas Intermediate crude for August delivery rose 3.2 percent or US$2.23 and closed at $72.76 a barrel on the New York Mercantile Exchange. While, Brent oil futures for August contract rose $1.31 and closed there was $77.62 on the London-based ICE Futures Europe exchange. The global benchmark crude is at a premium of $4.86 compared to WTI.

FX Market

The same pressures also shadowed the foreign exchange (FX) market. Today, the rupiah is expected to continue weakening ahead of BI’s meeting. The weakening of some currencies in Asia amid the strengthening of the greenback is expected to help weaken the rupiah. Together with the rupiah, the majority of currencies in Asia weakened this afternoon, led by the offshore Chinese yuan.

Moody’s Investors Service on Wednesday said the strengthening U.S dollar since mid-April has led to sharp currency depreciation and significant declines in foreign exchange reserves in a number of emerging and frontier market countries, increasing credit risks for those with large external funding needs.

The report looks at the external exposure of 40 emerging and frontier market sovereigns with some of the highest levels of external debt, either in U.S dollar terms or in relation to the size of their respective economies.

“Countries with large current account deficits, high external debt repayments and substantial foreign-currency government debt are most exposed to the impact of a stronger US dollar,” said Alastair Wilson, Moody’s Global Managing Director of the Sovereign Risk Group.

“To the extent that these currency fluctuations reflect capital outflows or significantly lower external inflows, they are credit negative for sovereigns with large external funding needs.”

Emerging markets that have been prone to large shocks to external financing conditions in the past are — all else equal – more likely to experience large shocks now unless past shocks led to adjustments that reduced their reliance on external funding.

Sustained and severe shocks to external financing conditions can have credit implications, in particular when they result in a significant further erosion of financial buffers, raise liquidity risks and/or take fiscal metrics onto a more unfavourable path than Moody’s had previously expected.

Email: linda.silaen@theinsiderstories.com

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