Despite rising Asian stocks on Thursday morning (04/01), supported by higher crude oil prices, surging Japanese shares, and US Federal Reserve minutes that show policy makers agree to a "gradual approach" in terms of further monetary tightening, Indonesia's benchmark Jakarta Composite Index is expected to remain under pressure today.
On Wall Street, the S&P 500 Index touched a fresh record high overnight on the back of the latest Fed minutes (covering the 12-13 December policy meeting). The minutes show Fed officials agree to tighten US monetary policy in a gradual manner. Meanwhile, the Fed sees US President Donald Trump's tax cut plans as providing a boost to consumer spending. However, it also detects uncertainty over the impact of fiscal stimulus on raising price pressures.
Japan's Nikkei index surged a whopping 2.4 percent on Thursday morning, its first trading day of 2018 as investors could give their first reaction to good worldwide economic data that have been released over the holiday period. These data hint at solid economic growth prospects for 2018.
Crude oil prices are hovering around three year highs amid concerns over supply disruptions in Iran. West Texas Intermediate approached USD $62 per barrel, a level that could spur new shale drilling.
But despite this positive context, the Jakarta Composite Index is expected to remain under pressure on Thursday (04/01) due to profit taking. Yesterday, Indonesian stocks had already slid 1.38 percent as investors seek profit after the sharp climb of Indonesia's benchmark index in the last trading week of 2017 when the Jakarta Composite Index hit one record after another.
Meanwhile, the US dollar finally started to strengthen again after six weak sessions. However, by 09:20 am local Jakarta time on Thursday, the Indonesian rupiah had strengthened 0.03 percent to IDR 13,471 per US dollar (Bloomberg Dollar Index).