It was a good day for Indonesian stocks on Wednesday (29/03) as the nation's benchmark Jakarta Composite Index (IHSG) hit a new record high at 5.592.51 points, one day after Indonesian markets had been closed for a public holiday. Not only Indonesia but most Asian stocks rose on Wednesday - in line with expectations - following Wall Street higher overnight where the Trump stock rally seems back on track, especially after positive new economic data.
US consumer confidence jumped to a 16-year high in March 2017, while the goods trade deficit of the world's top economy narrowed sharply in February, implying the US economy is regaining momentum. Meanwhile, US house prices soared to their highest level in almost three years. As a result, the Dow Jones Industrial Average snapped its eight-day losing streak on Tuesday, gaining 0.7 percent to close at 20,701.50. The S&P 500 Index also advanced 0.7 percent to 2,358.57, while the Nasdaq Composite Index added 0.6 percent to 5,875.14.
Previously, US stocks were heading downward for more than a week as investors started to doubt US President Donald Trump's ability to actually implement tax cuts and other fiscal-policy measures after having seen Trump's failure to reform health-care (scrapping Obamacare).
Meanwhile, markets were also pleased to see rising crude oil prices. Disruptions to the oil supply in Libya more than offset the impact of an increase in US crude inventories. Moreover, markets expect the Organization of the Petroleum Exporting Countries (OPEC) to extend its output reduction at the next meeting.
In Asia it caused risk appetite with Indonesian stocks touching a new record high, while Singapore stocks climbed to their highest in nearly 20 months (with especially financials soaring). Asian shares were also supported by the weakening Japanese yen against the US dollar even though Federal Reserve Vice Chairman Stanley Fischer said the US central bank could hike rates two more times in 2017. Although looming tightening monetary policy in the USA should encourage capital flows going to the USA, risk-on sentiment continued as such monetary tightening is also a sign of a strengthening economy.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.07 percent to IDR 13,323 per US dollar on Wednesday (29/03).
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia