JAKARTA (TheInsiderStories) – Good Morning! This week looks likely to be action packed with geopolitics firmly back on top of the market agenda after a spike in oil prices in the wake of the United States (US) killing of a top Iranian commander. Investors will also be watching out for the first American jobs release of the decade and fresh details on the phase one US – China trade deal.
Last week, oil prices spiked after the US killed a leading Iranian military commander General Qassem Soleimani in an air strike, heightening fears of a conflict in the Middle East that could disrupt energy supplies. US crude rose 3 percent and global benchmark Brent jumped 3.6 percent to more than US$68 a barrel.
At the same time, gold prices rose to the highest level in more than six years. In the spot market, gold prices rose 2.3 percent to $1,588.13 per troy ounce, the highest level since April 2013, and traded 1.5 percent at $1,575.36 at 7.22 Singapore time.
In addition, global markets could remain under pressure in the coming days, with analysts expecting to see defensive stocks outperforming, downward pressure on treasury yields and gains for safe-haven currencies.
Wall Street’ major indexes fell from record highs on Friday, with the S&P 500 sliding 0.7 percent, snapping five weeks of gains for the index. Besides the escalation in Middle East tensions a bigger-than-expected contraction in the US manufacturing sector raised concerns of slowing economic growth.
Still from US, the labor market has stayed relatively resilient despite weakness in factory activity and this along with solid wage growth has underpinned consumer confidence. The official data showed that 266,000 jobs were added in November, the most in 10 months while the jobless rate of 3.5 percent was the lowest in half a century. December’ jobs growth is forecast to have eased to 160,000.
The labor picture suggests that US’ President Donald Trump’ trade war with China has not had much impact on the broader economy, which expanded at a 2.1 percent pace in the third quarter of 2019. Manufacturing hiring did take a hit, but hopes are high for a Phase 1 trade deal on Jan. 15.
After nearly two years of brinkmanship, stop-start negotiations and tit-for-tat tariffs could end on Jan. 15, the date that President Trump says will see Beijing and Washington sign a Phase one trade deal. But China has kept quiet on the subject and investors don’t know for sure what the deal text will actually say, keeping global markets on edge.
From Europe, Britain’ parliament will reconvene on Jan. 7 and will debate the Brexit deal Prime Minister Boris Johnson has agreed with Brussels. The bill goes to parliament’s upper house on Thursday and should allow Johnson to fulfil his pledge to “get Brexit done” by Jan. 31.
But concerns over the prospect of a no-deal Brexit are still weighing on the British pound, which is back below $1.31, from December highs above $1.35. Once parliament approves the agreement, the clock starts ticking on Britain’ future trade relationship with the European Union (EU). If an agreement isn’t reached by end-2020, the outcome may yet be that Britain leaves the EU without trade arrangements in place.
Moreover, November industrial production data published this week is expected to point to a slow recovery across many economies. The release of output figures across Europe, including Germany, Spain, France and Italy will be keenly assessed for more positive signals for growth momentum towards the end of 2019.
Amongst Asia-Pacific data releases, attention will be on official industrial production figures for November which will be released for India, given weak GDP and industrial production data released in recent months. Following concerning signals from October data, the India Manufacturing PMI suggests an improvement in conditions towards the end of 2019.
In Indonesia, Bank Indonesia has agenda to announces December 2019 Consumer Survey Report on Jan. 7, Release of Foreign Exchange Reserves Statistics December 2019 on Jan. 8, and Retail Sales Survey Report November 2019 on Jan. 10
Last week, Rupiah was closed down 0.27 percent to 13,930 a US dollar while the Jakarta Composite Index edged up 0.63 percent at 6,323.47 compared to previous day. The major drivers, said the analysts, the tension between US and Iran.
Today, the local currency is estimating move in the range of 13,895 to 13,980 compared to the American Dollar. And the stock index move to a limited space between 6,263 – 6,350.
The shares to be watch for today are PT Waskita Beton Tbk (IDX: WSBP), PT Bank Danamon Tbk (IDX: BDMN), PT Adaro Indonesia Tbk (IDX: ADRO), PT Indika Energy Tbk (IDX: INDY), PT PP Tbk (IDX: PPTP), PT Adhi Karya Tbk (IDX: ADHI), PT Mitra Adi Perkasa Tbk (IDX: MAPI), PT AKR Corporindo Tbk (IDX: AKRA), PT Indocement Tunggal Perkasa Tbk (IDX: INTP), PT Lippo Karawaci Tbk (IDX: LPKR), and PT United Tractors Tbk (IDX: UNTR).
– Investing contributed to this article
May you have a profitable week!
Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia