Most Asian stocks are in the green zone on Monday morning (22/05), tracking Wall Street's performance on Friday where investors' attention shifted from recent political drama - related to US President Donald Trump - to good corporate earnings of Deere and Caterpillar. Meanwhile, rising crude oil ahead of the OPEC meeting on Friday (May 25, 2017) added positive sentiments to markets. Indonesia is again on track to finish at a new all-time record high.
Last Friday (19/05) the Dow Jones Industrial Average rose 0.69 percent, the S&P 500 Index added 0.7 percent, while the Nasdaq Composite rose 0.5 percent as there emerged a bit of calm weather - perhaps the eye of a typhoon - surrounding Donald Trump's position after he had allegedly urged former FBI director James Comey not to investigate former National Security Advisor Michael Flynn's possible connections to Russia. The US Department of Justice appointed a special council last week to investigate this possible matter of interference. Trump is now on a big international mission, visiting Saudi Arabia and Europe, which also somewhat shifts investors' attention away from the domestic political drama.
Coming Friday (25/05) officials of the Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna to discuss the crude oil price, rising US shale oil production, and OPEC production cuts. It is expected that the OPEC will prolong its supply curbs by a nine-month extension, a decision that reportedly would be backed by all members. As a result Brent crude oil is trading above USD $54 per barrel on Monday (22/05) for the first time in a month, extending last week's solid rally. West Texas Intermediate is approaching the USD $51 a barrel level.
Rising crude oil and easing concern about US political turmoil leads to rising Asian stocks on Monday (22/05), posting their biggest daily rise in a month. Meanwhile, the US dollar remains under pressure as US political turmoil undermines confidence in Trump's pro-business economic and tax policies. Therefore, many emerging market currencies in Asia are strengthening.
Indonesian stocks rise further into record high territory on Monday (25/05). By 11:00 am local Jakarta time the benchmark Jakarta Composite Index had climbed 0.61 percent to 5,827.01 points, setting the all-time record position higher and higher. Despite above-mentioned factors Indonesian stocks are also lifted by Standard & Poor's decision late last week to upgrade Indonesia's investment credit rating from BB+ to BBB- (investment grade status), reflecting an improvement in economic fundamentals (particularly related to the government budget). The upgrade unlocks a new flow of capital into Indonesia. It should also lead to rising foreign direct investment (FDI) into Indonesia in the years ahead.
Meanwhile, the Indonesian rupiah had appreciated 0.17 percent to IDR 13,302 by 11:00 am local Jakarta time (Bloomberg Dollar Index). Meanwhile, Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.84 percent to IDR 13,297 per US dollar as it also still needed to digest the S&P rating upgrade.
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia