Update COVID-19 in Indonesia: 70,736 confirmed infections, 3,417 deaths (9 July 2020)
6 July 2020 (closed)
USD/IDR (14,501) +55.01 +0.38%
EUR/IDR (16,343) -41.31 -0.25%
Jakarta Composite Index (5,052.79) -23.38 -0.46%
Many Asian stocks are in deep red territory dragged down by a 3.49 percent decline of Japan's Nikkei 225 index in the morning of Friday (23/03). The Nikkei 225 is responding to plunging stocks on Wall Street overnight where the Dow Jones Industrial Average tumbled 2.9 percent, while both the S&P 500 index and Nasdaq Composite dropped 2.5 percent, each. All three benchmark US indexes suffered their biggest drops since 8 February 2018.
What Is Causing All the Trouble in Global Markets?
Key factor that is pushing markets lower across the globe is renewed concern over a looming trade war between the USA and China. After the recent US decision to impose steel and aluminum import tariffs (a move that particularly aims at cutting steel imports from China, thus supporting the domestic steel industry), US President Donald Trump instructed US Trade Representative Robert Lighthizer to draw up a list of tariffs on Chinese products totaling up to USD $60 billion. It is expected that most items on this list will involve sensitive technology that the US considers vital to the domestic economy in the foreseeable future.
China responded by saying that it is ready for a trade war and announced plans for reciprocal tariffs on USD $3 billion of imports from the US, including products such as steel and pork.
The combination of a looming trade war (which would impact negatively on global economic growth) and the Federal Reserve's announcement earlier this week that it may become more aggressive in raising interest rates next year, gives rise to a flight to safety on Friday's trading day (23/03). Hence safe haven assets such as bonds and the Japanese yen are strengthening significantly. Meanwhile, the US dollar is appreciating modestly.
Indonesia's benchmark Jakarta Composite Index was down around 2 percent by 09:30 am Friday morning local Jakarta time, slightly recovering from heavier losses 15 minutes earlier. Meanwhile, the Indonesian rupiah had depreciated 0.19 percent to IDR 13,781 per US dollar by the same time (Bloomberg Dollar Index).