Most Asian stocks gained after FBI Director James Comey stated that there is no new evidence to warrant charges against US presidential candidate Hillary Clinton in the investigation involving her (private) email activities while in government. Apart from, generally, rising shares in Asia (on the back of risk-on sentiment) this news also caused a sharply strengthening US dollar. Indonesia's benchmark Jakarta Composite Index is the exception, however, having slid 0.29 percent to 5,347.16 points by 09:45 am local Jakarta time.
The latest FBI statement renews expectation that market favorite Clinton will beat rival Donald Trump in the US presidential election (scheduled for Tuesday 8 November 2016). Safe haven assets such as the Japanese yen and gold are therefore weakening, while the Mexican peso and US dollar are surging. Meanwhile, crude oil prices increased in early trading on Monday (07/11), reportedly fed by "opportunistic buying".
The Indonesian rupiah had depreciated 0.27 percent to IDR 13,103 per US dollar by 09:55 am local Jakarta time on Monday (Bloomberg Dollar Index). The US dollar is gaining against most currencies on rising chances that Clinton becomes the next US president.
Indonesian stocks, however, bucked the trend and have been in red territory since the market opened for the new trading week. This is most likely due to investors' reaction toward the massive anti-Ahok rally that was staged on Friday (04/11) and that ended in chaos hours after markets had closed (before these markets had closed Indonesian stocks experienced a small relief rally on Friday as the demonstration had gone peacefully; this is now being undone on Monday morning). However, we expect that Indonesian stocks will go into green territory in the second trading sessions on the back of rising indices across the Asian region, while the rupiah will remain under pressure for the remainder of the day.
Although we detect a small relief rally in Asia on Monday, investors may decide to turn cautious again tomorrow.