JAKARTA (TheInsiderStories) – Good morning! United States (US) President Donald Trump again will impose 10 percent tariffs for US$300 Chinese goods on September. The announcement immediately shook the financial markets, sending the yield on the 10-year Treasury note to its lowest level since 2016 and pushing down stock prices.
Trump’ threat comes after the 12th round meeting of US and Chinese delegations in Shanghai early this week. He suggested the negotiations had gone badly, with China failing to follow through on its pledges to buy more US farm products.
Negotiators from both countries is scheduled to meet in August to discuss two main topics in the negotiations which ended Wednesday (08/01). The two countries confirmed that it had discussed increasing imports of Chinese agricultural products from the US.
During the week, Trump and Russian President Vladimir Putin held a phone conversation regarding bilateral trade and the raging wildfires in Siberia. During the call, Trump offered to help cope with the wildfires, while Putin considered the offer as a sign of potential restoration of bilateral relations.
Russia has declared a state of emergency in four regions of Siberia and the Far East because of the wildfires. According to latest data from the Russian Aerial Forest Protection Service, fires were raging on an area of nearly 3 million hectares and active extinguishing activities were going on for an area of 107,123 hectares.
In Europe, Bank of England (BoE) cut its growth forecast in the face of rising Brexit fears and a slowing global economy, or if it comes out of the EU in a mess, the BoE should not avoid lowering interest rates in advance to support businesses and households through turbulence.
After the US’ Federal Reserve lowered interest rates for the first time since the global financial crisis, the BoE said it was still expected to increase borrowing costs in stages, although this now depends on “smooth” global increases and Brexit.
In Asia, South Korea warned that if Japan dropped it from the so-called white list of countries that enjoy minimum trade restrictions, there would be a big impact, including damage to bilateral security cooperation. Rising disputes over the past month threatened to disrupt the global supply of semiconductors and weaken security cooperation in Korea North.
Yesterday, South Korea‘ foreign minister Kang Kyung-wha held the first high-level talks with his Japanese counterpart, Taro Kono in Bangkok, Thailand. But the talks resulted in little progress, with a South Korean foreign ministry official saying “almost no change” in Japanese attitudes. Kang urged Kono to stop the process or that it would force South Korea to take revenge.
Along with the sentiment of falling interest rates, world oil prices sank below $65 a barrel on Thursday, declining for the first time in six days. West Texas Intermediate (WTI) crude oil prices declined 1.37 percent or 0.80 points to $57.78 per barrel, while Brent crude oil prices plunged 1.01 percent or 0.66 points to $64.39 per barrel.
The decline in oil price occurred because of abundant supply and demand growth showing signs of weakening globally, due to trade conflicts, Brexit and other events that tended to potentially weaken economic growth, including the progress of US and Chinese negotiations in resolving trade dispute.
To improve connectivity in the field of air transportation in order to support trade in goods and services, investment and movement of tourists from both countries, Indonesian President Joko Widodo has signed Presidential Decree Number 44 of 2019 concerning Ratification of Air Transport Agreement between the country and Turkey to Scheduled Air Transport on July 3, from which was signed on February 18, 1993.
It said, Indonesia and Turkey has the right to appoint an air transport company to carry out international air transport services and to withdraw or divert the appointment of an air transport company. Both parties agreed that airlines have an international routes to both countries must be exempt from all duties, taxes, fees and checks, and other costs of commonly used equipment, supplies fuel, and lubricating oil.
Yesterday, President Widodo has signed the regulation to inject State capital to PT Perusahaan Listrik Negara (PLN) worth of Rp5.5 trillion ($461 million) originating from the 2019 State Budget. He also suggested the use of electricity-based transportation in overcoming pollution problems in Jakarta.
On the other hand, crude oil spills from subsea wells in Karawang, West Java have dropped sharply, increasing the prospect of early closure of leaks that threaten marine life and beaches around the densely populated northern island of Java. The leakage rate has dropped to around 300 barrels per day, or 10 percent of the spill when it was first known more than two weeks ago.
State-owned energy company, PT Pertamina has mobilized and warned 32 vessels to fight oil spills and fire engines among other measures. A total of 800 people and more than 100 military personnel were also involved in clearing oil spills on the coast.
While the gas producer, PT Donggi Senoro aimed to reduce its production from an initial estimate of 43 cargoes because of the current low gas prices. Recently, the company produced 41 LNG cargoes with eight cargoes sold to the spot market.
Yesterday, the Jakarta Composite Index closed down 0.14 percent or 8.96 points to 6,381.54. Likewise, the Rupiah also depreciated to the level Rp14,116 per US dollar along with US interest rate cuts which actually made the Greenback move higher.
Today, the composite index is estimating will move in the range 6,272 – 6,488. While, the stocks to be watch PT Astra International Tbk (IDX: ASII), PT Telkom Indonesia Tbk (IDX: TLKM), PT HM Sampoerna Tbk (IDX: HMSP), PT Bank Negara Indonesia Tbk (IDX: BBNI), PT Bank Central Asia Tbk (IDX: BBCA), PT XL Axiata Tbk (IDX: EXCL), PT Mayora Indah Tbk (IDX: MYOR), and PT Nippon Indosari Corporindo Tbk (IDX: ROTI).
May you have a profitable weekend!
Written by Linda Silaen and TIS Intelligence Team. Please Read Our Insight to Get More Information about Indonesia