Federal Reserve's Chairman Jerome Powell in talks with Fellow Central Bank's Governors at the G20 Meeting in Bali last October - Photo by IMF-WB Official

JAKARTA (TheInsiderStories) – Last week, the world was preoccupied with the election of new Prime Ministers in Britain, Iran’ nuclear tensions to trade warming on the Korean Peninsula. This week, a full diary for central bank meetings in the United States (US), United Kingdom (UK) and Japan plus key data releases such as worldwide manufacturing PMI surveys, US non-farm payrolls and Eurozone’ GDP.

Markets are expecting an interest rate cut of 25 basis points from the Federal Open Meeting Committee at their 31st July meeting, widely seen as ‘insurance’ against a weakening of the economy amid growing concerns about the outlook.

The Bank of England Inflation report and press conference will help market assess the Bank’ potential response to various Brexit developments in coming months. In Asia, eyes will be on the Bank of Japan, where opinions are divided on the need for greater monetary easing.

Asian Manufacturing PMI surveys will provide the earliest glimpse into regional economic trends in July, with China, Japan and South Korea in particular focus amid rising trade frictions. While, Hong Kong GDP will also garner attention after latest PMI surveys signaled the negative impact of recent protests on business activity.

Previously, Federal Reserves’ chairman Jerome Powell said it would likely provide additional protection for the central bank to cut its interest rates this Wednesday for the first time in decade, due to increased risk of economic prospects of a bitter trade war between the US and China also slowing global growth.

On Friday (07/26), US’ GDP increased at an annual rate of 2.1 percent in the second quarter of 2019, retreating from the unrevised 3.1 percent pace in the January – March period. Economists rated the speed of economic growth in the long run without triggering inflation between 1.7 percent and 2.0 percent.

Starting today, a round of negotiations to ease the escalation of trade tensions between the Washington and Beijing will soon find a new chapter. There is a high possibility that the US – China trade war will continue into 2020.

US’ President Donald Trump accused China might delay the deal in an effort to wait for him to come out with hopes the Democrats will win in November 2020. He said China used stalling tactics and he doubted trade agreements would be achieved in the near future, with the main negotiators the two countries will meet in Shanghai this week.

After being elected last week, UK’ Prime Minister Boris Johnson was working on the assumption that the EU would not renegotiate the Brexit agreement and is stepping up preparations to leave the block on Oct. 31 without an agreement. He plan to seek a new exit deal with the EU even the organization has repeatedly said that the agreement cannot be reopened.

In nuclear issue, Iran will meet with Britain, Germany and France plus Russia and China to hold talks to respond to the increasing tensions between Iran and the West which include sea confrontation and Tehran’s violations of the nuclear agreement. European countries say further violations of the agreement by Iran will increase confrontation when Tehran and Washington are at risk of miscalculations that could lead to war.

However, their efforts to protect trade with Iran against US sanctions have so far not produced anything concrete. Iran has said it will withdraw from the pact unless Europeans find a way to protect its economy from the sanctions.

In the country, Statistic Indonesia will release data on the Indonesian Democracy Index in 2018. In 2017, the Indonesian Democracy Index reaches 72.11. This number has increased compared to the 2016 index number of 70.09.

But Indonesia’ democratic performance is still in the moderate category. Changes in index numbers from 2016–2017 were influenced by three aspects of democracy, namely first, civil liberties which rose 2.30 points, from 76.45 to 78.75. Second, political rights fell 3.48 points, from 70.11 to 66.63. And third, democratic institutions which rose 10.44 points, from 62.05 to 72.49.

Moreover, Indonesia sent a strong protest to the Government of the European Union (EU) for the issuance of a proposal for the number of temporary compensation fees for biodiesel products in July 2019. The amount of temporary compensation fees proposed is by a margin of 8-18 percent.

Objections will be focused on the method of calculating the amount of import duty which allegedly did not pay attention to the facts obtained during the investigation. The EU government is thought to only use the best information available, which is data that is owned by EU petitioners that clearly harm Indonesia. With that, the EU has provided significant trade barriers to Indonesia’s biodiesel exports.

Last weekend, Vice President Jusuf Kalla received a visit from one of the founders and representatives of Taliban leaders Mullah Abdul Ghani Baradar in Jakarta. The two leaders’ meeting emerged when the Indonesian government and Islamic clerics continued to offer support for the Afghan peace process.

Jakarta is set to host a conference of Muslim clerics from Afghanistan, Pakistan, and Indonesia later this month.  Kalla said Indonesia had always maintained communication with all parties involved in the peace process in Afghanistan, including with the Afghan Government and the Taliban.

Last week, the Jakarta Composite Index closed down 1.19 percent or 76.13 points to 6,325.24 in late trading. This week the composite index is estimating move in the range 6,302 – 6,488.

Stocks to be watch namely PT Astra International Tbk (IDX: ASII), PT London Sumatera Plantation (IDX: LSIP), PT Astra Agro Lestari Tbk (IDX: AALI), PT Summarecon Agung Tbk (IDX: SMRA), PT Telkom Indonesia Tbk (IDX: TLKM), PT HM Sampoerna Tbk (IDX: HMSP), PT Bank Central Asia Tbk (IDX: BBCA), PT Wijaya Karya Tbk (IDX: WIKA), and PT Waskita Beton Tbk (IDX: WSBP).

Then, Rupiah against the US dollar lowered to 13,999 or fell 0.17 percent. During the last week, rupiah moved around Rp13,993.

May you have a profitable week!

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