Photo by ECB

JAKARTA (TheInsiderStories) – The Euro exchange rate made an impact on the Asian money market Monday as startled investors stared at the referendum by Catalonia to separate from Spain.

Euro weakness manifested despite news of strengthening of the Japanese and Chinese economies, a phenomenon that could provide a boost to the capital and commodity markets. The Euro fell 0.3 percent and traded at US$ 1.1773 after the vote, while liquidity in Asian markets dried up because of Chinese and South Korean holidays.

The situation in the ‘Land of the Matador’ was adjudged as less controlled, as local government heads of Catalonia opened the door to a potential declaration of independence from Spain.

Asian stocks were much better than bonds after China, Japan and South Korea’s economic data rose well for a sustained rise in global growth. The MSCI Asia-Pacific Index outside Japan climbed 0.28 percent, while the E-Mini futures index for the S & P 500 rose 0.14 percent.

Australia’s main index jumped 1.1 percent, while Japan’s Nikkei rose 0.2 percent after a survey of producers produced the strongest sentiment in a decade. China’s manufacturing grew at the fastest pace since 2012 in September, as factories ramped up production to profit from strong demand and high prices.

Meanwhile, our Rupiah exchange rate for interbank transactions on Monday morning, moved down 61 points to Rp13,506, compared to the previous position at Rp13,445 per US$.

Monex Investindo Futures analyst Putu Agus said on Monday that the probability of a US interest rate hike in December 2017 of more than 80 percent would be one of the key factors driving the US dollar to strengthen, amid the volatility of the Euro.

“The US dollar has been on a strong trend since the end of last week, supported by Fed Chairman Janet Yellen’s statement that opened the opportunity for interest rates at the end of 2017,” he said.

Agus added that U.S President Donald Trump’s statement on corporate tax cuts in the United States also added positive sentiment for the US$.

The movement of the Jakarta Composite Index (JCI) on the Indonesia Stock Exchange opened up 13.83 points on Monday, responding to positive domestic sentiment. JCI was pumped up 13.83 points or 0.23 percent to 5,914.69. Meanwhile the group of 45 leading stocks or LQ45 index moved up 3.54 points (0.36 percent), to 982.98 points.

“The publication of corporate earnings reports for the third quarter of 2017, which was originally to be released in October is expected to improve to become one of the positive sentiments for JCI,” said Valbury Asia Securities Research and Analysis Nico Omer Jonckheere.

He added, that the World Economic Forum which again raised the rank of global competitiveness of Indonesia (Global Competitiveness Index) 2017-2018, climbing five levels to rank 36th out of 137 countries, also added a positive edge to the market.

Other positive news, he added, Indonesia’s International Investment Position (PII), which recorded an increase in the second quarter of 2017 compared to the end of the first quarter of 2017, added a positive expectation for the domestic stock market.

Bank Indonesia noted that PII Indonesia recorded net liabilities of US$350.2 billion (35.7 percent of GDP) at the end of second quarter 2017, up US$15.6 billion from net liabilities at the end of the first quarter of 2014 of US$334, 6 billion (34.9 percent to GDP).

Writing by Elisa Valenta, Email: elisa.valenta@theinsiderstories.com