JAKARTA (TheInsiderStories) – Good Morning! United States (US) Federal Open Market Committee (FOMC) decided cut its Fed Fund Rates by half percentage to 1.00 – 1.25 percent, on Tuesday (03/03). The policymaker said, the fundamentals of the United States (US) economy remain strong, however, the coronavirus poses evolving risks to economic activity.
In the coming weeks, the committee stated is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy. Earlier, Standard & Poor’s expected US GDP growth in the first quarter would be closer to 1 percent than its pre-virus forecast of 2.2 percent.
The chief economist Beth Ann Bovina also sees second-quarter growth would also closer to 1 percent. The hit to US growth would come through five main channels like travel and tourism, weaker demand from China and rest of the world, disruptions to supply chains, reduced private spending and lower commodity prices. China is the US’ third-largest trading partner, making up 13.5 percent of total trade with the country.
Today, Bank of Canada will have its interest-rate meeting, with expectations of it following the Fed growing.TD Securities expects a cut of 25 basis points to 1.5 percent from earlier at 1.75 percent.
In Asia, the Hong Kong Monetary Authority also lowered its base rate through the overnight discount window by 50 basis points to 1.5 percent on Wednesday, hours after the FOMC delivered a rate cut.
Bank of Japan (BoJ) could ramp up stimulus as part of efforts by central banks to prevent the coronavirus outbreak from triggering a global recession in this month. The Fed decision to cut interest rates adds pressure on the Japanese central bank to follow in its footsteps.
The BoJ could take its -0.1 percent short-term rate target deeper into negative territory. This will also become a strong option if the Group of seven statement calls on central banks to jointly cut rates.
The Australian Bureau of Statistics showed the A$2 trillion (US$1.3 trillion) economy accelerated by 0.5 percent in the last quarter of 2019 from the previous quarter at 0.6 percent. That took the annual pace to 2.3 percent.
Oil prices jumped after the rate cut by the Fed, but ended mixed as the decline in equities accelerated and concerns about what Organization of Petroleum Export Countries (OPEC) decision on Vienna’ meeting on Thursday. The Joint Technical Committee of the oil cartel recommended a reduction in production up to 1 million barrels per day.
While, the Energy Information Administration will issues its weekly report on oil inventories. On Tuesday, West Texas Intermediate oil prices for the April 2020 contract traded at US$47.19 a barrel and the Brent oil for the May 2020 contract down by 4 cents to $51.86 per barrel.
In Indonesia, President Joko Widodo is scheduled to open a trade ministry meeting, chairing a limited meeting related to the strategy of accelerating poverty alleviation, increase in national petroleum production, and electricity program ecosystem structuring. Then, the coordinating minister for the economy, Airlangga Hartarto, become a speaker at the seminar on the Employment and Taxation Bill.
Then, the coordinating minister for human and cultural empowerment will lead a meeting related to the Regular School Operational Assistance for 2020. And, the ministry of trade is holding a national work meeting for this year’ program.
Yesterday, the Rupiah closed 0.13 percent lower at 14,283 per US dollar and the Jakarta Composite Index (JCI) closed higher at 2.94 percent at 5,518,628. Today both major instrument have a window move in the positive territory followed the various development in the world.
Bank Indonesia said it was ready to intervene in the Rupiah and the bond market after the Fed cut its benchmark interest rate. The central bank rated FOMC is trying to give a signal to contain the economic downturn caused by the corona virus.
Stocks to be watch for today are PT Kimia Farma Tbk (IDX: KAEF), PT Bank Central Asia Tbk (IDX: BBCA), PT Astra International Tbk (IDX: ASII), PT AKR Corporindo Tbk (IDX: AKRA), PT Indofood CBP Sukses Makmur Tbk (IDX: ICBP), PT Telkom Indonesia Tbk (IDX: TLKM), PT Solusi Bangun Indonesia Tbk (IDX: SMCB), PT Semen Indonesia Tbk (IDX: SMGR), PT Indofood Sukses Makmur Tbk (IDX: INDF), PT Bank Mandiri Tbk (IDX: BMRI), and PT Bank Rakyat Indonesia Tbk (IDX: BBRI).
May you have a profitable day!
Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia