26 February 2020 (closed)
USD/IDR (14,018) +52.00 +0.37%
EUR/IDR (15,291) +111.19 +0.73%
Jakarta Composite Index (5,688.92) -98.22 -1.70%
Stock indices in Southeast Asia plunged on Friday (18/12), led by benchmark indices in Thailand and Indonesia. These Asian markets followed the global correction that occurred after investors weighed in the possible impact of the Federal Reserve's interest rate hike. US and European stocks dropped on Thursday and Friday, while prices of oil and other commodities continued to slide. Indonesia's Jakarta Composite Index fell 1.92 percent to 4,468.65 points.
When the US Federal Reserve announced on Wednesday (16/12) - in line with market expectations - that it would raise its key Fed Fund Rate by 0.25 percent, markets initially reacted positively, signaling that most investors had already priced in the rate hike. US stocks immediately surged on Wednesday, followed by soaring indices in Asia on Thursday (17/12). However, US stocks plunged on Thursday on persistently falling oil prices and profit taking that occurred after the relief rally (ahead of the year-end holidays next week). Again, the performance of US stocks had a contagion effect on Asian indices (but this time a negative effect), explaining the plunging Asian stock indices on Friday.
The US benchmark West Texas Intermediate crude oil shed 1.00 percent to USD $34.60 per barrel. Apart from low oil prices, the release of China's Beige Book (a quarterly survey of economic activity) raised concern as it detects pervasive weakness in the world's second-largest economy.
Falling stocks are not expected to end yet. On Friday (18/12) the Dow Jones industrial average fell 2.1 percent, the Standard & Poor's 500 index lost 1.8 percent, while the Nasdaq composite dropped 1.6 percent. This implies that Indonesian (and stocks worldwide) will continue to feel downward pressure at the start of the new trading week.
The finance sector index led declines (sliding 3 percent) on the Indonesia Stock Exchange on Friday due to the lack of positive sentiments in the country's finance industry. On the last trading day of the week, foreign investors recorded net sales of IDR 309.6 billion (approx. USD $11 million).
Jakarta Composite Index (IHSG):
The Indonesia Stock Exchange will be closed on Thursday 24 December, Friday 25 December, and Thursday 31 December due to Christmas and New Year celebrations.
In stark contrast to the performance of Indonesian stocks was the performance of the Indonesian rupiah. The rupiah appreciated 0.65 percent to IDR 13,918 per US dollar on Friday (18/12) based on the Bloomberg Dollar Index. This remarkable performance was caused by Bank Indonesia's decision to maintain its BI rate at 7.50 percent at Thursday's Board of Governor's meeting. Moreover, the US Markit Economics' flash services purchasing managers index dropped to a reading of 53.7 in December, from 56.1 in the preceding month, signalling cooling new business growth in the USA, hence weakening the US dollar. Lastly, the US dollar weakened against several global currencies after the central bank of Japan merely tweaked its monthly asset-purchase program, suggesting it may not ease policy as much as expected.
However, Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.03 percent to IDR 14,032 per US dollar on Friday (18/12).
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia