Home News Morning Briefing: Pressures in the Global Economy Still High

Morning Briefing: Pressures in the Global Economy Still High

The United States (US) Wall Street ended in the red zone on Monday, burdened with the lack of progress regarding the expenditure package negotiated by the Congress to reduce the economic impact of the COVID-19 - Photo by White House

JAKARTA (TheInsiderStories) – Good Morning! The United States (US) Wall Street ended in the red zone on Monday, burdened with the lack of progress regarding the expenditure package negotiated by the Congress to reduce the economic impact of the COVID-19. While, Federal Reserve (Fed) announced a second major wave of initiatives to support the American economy.

The Fed said it would buy treasury bonds and mortgage-based securities issued by government or agency to support the smooth functioning of the market and the effective transmission of monetary policy to broader financial and economic conditions.

Morgan Stanley has warned the epidemic could cause US GDP to shrink up to 30 percent in the second quarter of 2020 quarter and a deeper recession for the economy than previously thought.

In Europe, British Prime Minister Boris Johson was lock down its territory starting Monday evening. The decision was taken after he ordered broad-range measures to stop residents from leaving their homes “during this national emergency”.

While, Italy, together with France and Spain, are pushing for a plan to issue joint bonds to the European Union (EU) as an economic stimulus amid the spread of the coronavirus. So far, Italy is the most economically affected country and in terms of fatalities with industrial activities that have stopped since March 7, and the death toll has reached 5,000 lives.

Earlier, Italian Prime Minister Giuseppe Conte had announced an economic stimulus package worth EUR25 billion to save the Italian economy. This value is estimated to not be enough for Italy’ own needs.

German Chancellor Angela Merkel still reluctant to support the proposal. To date, EU are designing mechanisms that can work effectively despite the German reluctance to pass this plan.

In indonesia, President Joko Widodo will give a direction to governors to facing a pandemic today. Then, he will lead a limited meeting on the policy of the national examination and BPJS Health financing.

Then, Bank Indonesia and the finance ministry will provide a press statement about the current condition of the Indonesian economy amid the spread of the virus. Meanwhile, the coordinating minister for the economy, Airlangga Hartarto will chair a meeting related to the labor incentive program and the work copyright committee.

Yesterday, the S&P 500 index closed down 2.93 percent to 2,237.40, the Dow Jones Industrial Average fell 3.04 percent to 18,591.93, and the Nasdaq Composite ended down 0.27 percent to 6,860.67. Inline with Wall Street, the MSCI Asia Pacific index also plunged 3.4 percent and the Stoxx Europe 600 index tumbled 4.3 percent.

While, Indonesian Rupiah landed at 16,575 per US Dollar, or down 3.85 percent compared to last week. Year to date, the exchange rate has been corrected by 19.58 percent. And, the Jakarta Composite index (JCI) corrected 4.9 percent to 3,989.

Bank Permata’ chief economist Josua Pardede rated that the weakening of the Rupiah and JCI was still caused by the lack of interest of foreign investors to collect risky assets. The panic selling also occurred even for assets that normally became safe havens such as gold.

As long as foreign investors’ confidence and interest in risk assets remains low, he thinks the weakening of the Rupiah will still occur and is wide open for a sharp decline. in the stock market, the analysts noted, as long as the index is not corrected below 3,918, has possible to strengthen in the range 4,123 – 4,400.

Stocks to be watch for today are PT Indofood Sukses Makmur Tbk (INDF), PT Bank Central Asia Tbk (IDX: BBCA), PT Bank Rakyat Indonesia Tbk (IDX: BBRI), PT Adaro Indonesia Tbk (IDX: ADRO), PT Astra International Tbk (IDX: ASII), PT Kimia Farma Tbk (IDX: KAEF), PT Indofarma Tbk (IDX: INAF), PT Petrosea Tbk (IDX: PTRO), PT Indo Tambangraya Megah Tbk (IDX: ITMG), PT Jasa Marga Tbk (IDX: JMSR), PT Kalbe Farma Tbk (IDX: KLBF), PT Matahari Department Store Tbk (IDX: LPPF)

May you have a profitable day!

Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia