Weekly Market Review (30July 2018) - What happened & What's next?
- Global markets were moving to positive side after EU agreed to calm trade war tension with US by planning to buy more LNG and soybeans. On the other hand, China unveiled a package of policies to boost domestic demand, including more proactive fiscal policy and better coordinated with financial policy. Propped up by USD86m foreign inflow (the highest weekly inflow YTD), JCI jumped +1.98%WoW to IDR5,989 last week, relatively in-line with regional market. Coal sector was the best performer (+4.9% WoW), owing to Government’s plan to replace DMO policy with a new coal export tax. Meanwhile, Agri sector became the worst performer by declining -0.7%WoW, as CPO price continued to slide. Newsflows to be watched within this week include US PCE, ISM Manufacturing, Initial Jobless Claim, FOMC Rate Decision, Trade Balance, Unemployment Rate and Average Hourly Earnings; China’s PMI and Caixin PMI; Indonesia’s CPI and PMI Manufacturing.
- IDR strengthened by +0.5% WoW to IDR14,417, relatively in-line with regional market. Furthermore, DXY was up 0.2% WoW.
- Ahead of Fed meeting and July inflation data, bond market yield decreased by 6-18 bps. 10 years series decreased the most by 18 bps, from 7.86% to 7.68%.
- Foreign investor reduce position on Indo GB, by approximately IDR7trn, especially on mid tenor series.
- Strong consumer and business spending drives US GDP growth at 4.1% yoy in Q2. This made 10 year US treasury yield increased from 2.89% to 2.96%.
- US Initial Jobless Claims increased 9,000 to a seasonally adjusted 217,000 for the week ended July 21, above market expectation of 215,000.
- US GDP jumped 4.1% in 2Q18, in-line with consensus estimates and the strongest growth since 2014.
- US New Homes Sales fell 5.3% to a seasonally adjusted annual rate of 631,000 units in June, the lowest level since October 2017 and stronger than consensus of 670,000.
- US Government would provide up to USD12bn in emergency relief for farmers hurt by the president’s trade war.
Foreign net purchases of Indonesia equities