Weekly Market Review (23 Apr 2018) - What happened & What's next?
- Despite foreign outflow of USD110.3m, JCI continued to rebound as much as +0.4%WoW, relatively outperform regional markets. It was partly driven by positive trade balance data in March’18 that ended three consecutive months of deficits. Mining sector was leading the market with +3.0%WoW as higher metal price, due to escalating tension between US and Russia. Meanwhile, Infra sector was dragging down the market by -1.8% WoW. On the other hand, US markets closed higher last week with +0.4%-0.6%WoW, owing to a string of strong earnings reports. Newsflows to be watched within this week include US 1Q18 GDP, initial jobless claim, and ECB Benchmark Rate Decision.
- IDR weakened by -0.8% WoW to IDR13,893/USD last week, underperform emerging market peers that dropped only -0.3%WoW. Meanwhile, USD index (DXY) was up by +0.6%WoW.
- Rising oil prices, weaken IDR, and increasing US Treasury yield to 2.9% level has affected bond market yield. IDR bond yield increased by 17-21 bps across the curve. 10 years yield rise from 6.54% to 6.79% level.
- With higher volatility and pressure on IDR, domestic and foreign investor stay in cautious mode. Foreign investor start to reduce exposure on mid tenor series.
- US latest data released shows continued job growth and tight labor market, with unemployment benefit claims fell. Stronger US data drives U.S. treasury yield increased from 2.82% to 2.96%.
- US initial jobless claims decreased by 1,000 to a seasonally adjusted 232,000 (vs 230,000 claims expected) in the week ended April 14. They have held below 300,000 for 163 consecutive weeks, the longest streak in weekly records going back to 1967.
- Oil price (Brent) rose to USD74.06 (+2.0%WoW) last week to their highest since late 2014 as US crude inventories declined and after Saudi Arabia is seeking to push oil prices higher at USD80.
- China reported real 1Q18 GDP of 6.8%YoY, topping consensus estimate of 6.7%. Industrial production grew 6.0% YoY in 1Q18, after robust 7.2% in Jan-Feb. Retail sales also beat market expectations, picking up to 10.1% YoY in Mar from 9.7% in Jan-Feb.
- Indonesia's trade balance swung back into surplus in Mar after three consecutive months of deficits (+USD1,092m in Mar vs. -USD53m in Feb). Exports moderated to a growth of 6.1% YoY in March (vs 12% in Feb’18), above consensus expectations of 3.0%. Import growth softened to 9.1%YoY (+24.9% in February), on account of a slowdown in non-oil and gas imports.
- Government expects 1Q18 GDP growth to pick up pace to 5.20%YoY (vs5.01% in 1Q17). According to Finance Minister, Sri Mulyani, economic growth is still well within the targeted range of 5.2% - 5.4% for 2018.
- Bank Indonesia held the 7-day reverse repo rate at 4.25% and overnight deposit and lending facilities at 3.5% and 5.0% respectively. The Central Bank sees its move as maintaining stability amidst rising external volatility.
Foreign net purchases of Indonesia equities