Weekly Market Review (07 May 2018) - What happened & What's next?
- JCI continued to plummet -2.0%WoW along with foreign outflow of USD192.9m last week (YTD: USD2.8bn), underperforming the region with selling flows focused on the big caps (consumers and banks). The ongoing decline was predominantly due to pressure on IDR in the absence of BI policy rate hike as a response to higher Fed rate. Agriculture sector was the worst performer, declining -6.2% WoW, on the back of poor results. Meanwhile, miscellaneous industry edged higher last week, by gaining +2.2%WoW. Newsflows to be watched within this week include Indonesia GDP 1Q18, Balance of Payment, foreign reserve, U.S. CPI, initial jobless claims and China’s foreign reserve, trade balance and CPI.
- IDR weakened by -0.4% WoW to IDR13,945/USD last week, relatively better than emerging market peers that fell -1.2%WoW. Meanwhile, USD index (DXY) was strengthened by +1.1%WoW, after strong U.S. job and non-farm payrolls data.
- Ahead of Indonesia 1Q Indonesia GDP data released, bond market yield increased by 0.08% mostly on mid series.
- Foreign investor continued to reduce ownership on Indo government bonds by 1.33 T, Selling flow is mostly from Europe based fund.
- Below consensus NFP data(164.000 vs 189.000 cons) drives US treasury yield slightly lower from 2.96% to 2.95% while dollar index rose by 1 % over the week
- The Federal Reserve held interest rates steady at the conclusion of its two-day policy meeting and acknowledged inflation is close to target without indicating any intention to veer from their gradual tightening of monetary policy.
- The U.S. trade deficit narrowed sharply in March as exports increased to a record high amid a surge in deliveries of commercial aircraft and soybeans. The trade gap dropped 15.2% to USD49bn, the lowest level since September. March's decline ended six straight monthly increases in the trade deficit.
- The ISM’s U.S. manufacturing gauge fell two points in April to 57.3, the second consecutive decline since the index hit a nearly 14-year high in February.
- U.S. initial jobless claims increased by 2,000 to a seasonally adjusted 211,000 (vs expectation 225,000) in the week ended April 28. The 211,000 new claims last week were the second-lowest weekly reading since Dec. 6, 1969.
- The unemployment rate fell to 3.9% in April, an 18-year low, even as nonfarm payrolls rose by just 164,000. The closely watched average hourly earnings number rose by 4 cents, equating to a 2.6% annualized gain, slightly lower than expected.
- China’s Caixin PMI came in at 51.1 for April (vs an expected 50.9). This followed the release of official April manufacturing PMI data on Monday, which showed that expansion in China's manufacturing sector slowed slightly. The Purchasing Managers' Index (PMI) fell to 51.4 in April, from 51.5 in March.
- Apr18 CPI inflated 0.10% (vs. consensus at 0.18%), translating into a flat YoY inflation at 3.41% (vs. 3.40% in Mar18). Raw and processed foods actually contributed -0.05 ppt and 0.05 ppt, below expectation. On the other hand, core inflation recorded a marginal pick up of 2.69% from 2.67% YoY in Mar18.
Foreign net purchases of Indonesia equities