Weekly Market Review (8 October 2018) - What happened & What's next?
- JCI was down 4.1% WoW to 5,731.94 last week due to surging USD strength with DXY hitting 95.6 largely due to stronger than expected US data suggesting higher growth. The National Retail Federation also released an upbeat outlook on the holiday shopping season, predicting growth of 4.3%-4.8% compared with last year, citing such factors as strong employment levels and robust consumer sentiment. Meanwhile, oil price reached its 4-year high at $86/bbl as concerns over supply shortage from Iran reemerges. These prompted a surge in 10-year US Treasury bond yields further above 3%. After 8 days of net inflow in second half of September, foreign investors net sold USD155mn of equities first week of October. Energy was the best performing sector during week (gaining 1.1%WoW) that was driven by PTBA (+9.7%WoW). Meanwhile, material was the worst performing sector (-9.3%WoW) led by INKP (-17.0% WoW). This week, market awaits for US CPI, initial jobless claim, and China trade balance and Caixin PMI.
- IDR depreciated by 1.69% WoW to IDR15,182 with DXY continued to rise to 95.62 (+0.52%WoW). As a net oil importer, high oil price adds pressures on the IDR.
- On the backdrop of weaker IDR and higher UST yield, Indonesia government bond yield trade higher. Across the curve, yield were up by 6 – 28bps with 20yr series experiencing the highest increase.
- Foreign investor continue to increase position on Indo GB by Rp 0.5 Tn, while domestic investor still cautious.
- 10yr US Treasury yield increased from 3.07% to 3.23%. Mixed signal were seen from US jobs data released. US economy added 134,000 jobs last month vs 185,000 consensus, while unemployment rate declined to 3.7% better than consensus at 3.8%.
- US unemployment rate fell to 3.7%, the lowest since December 1969. Average hourly earnings grew by 2.8%, in-line with the street’s forecast.
- China forex reserve recorded at US$3,087bn (estimated US$3,105bn) vs. US$3,110bn in August.
- Italy unveiled a target for its 2019 budget deficit of 2.4% of GDP, three times the target set by the previous government. Fears of a budget clash between Rome and Brussels, a rise in Italian debt and potential credit downgrades sent Italian bond yields soaring and renewed worries about the potential for Italy to trigger a new chapter in the eurozone’s long-running debt crisis.
- Indonesia September FX reserves recorded at USD114.85bn, down USD3.05bn from the previous month.
- 9M18 non-tax revenue reached Rp281tn (102% of the FY18 target) and the Ministry of Finance (MoF) expects the final total to reach Rp360tn by the year end.
- 9M18 tax revenue reached Rp900tn (+16.9% YoY), accounting for 63.3% of FY18 target of Rp1,424tn.
Foreign net purchases of Indonesia equities