Indonesian stocks and the rupiah started strong on Wednesday (09/09). Immediately after opening the benchmark Jakarta Composite Index rose over one percent to 4,366 points, while the rupiah appreciated 0.25 percent to IDR 14,244 per US dollar (Bloomberg Dollar Index) as these assets were supported by positive global sentiments after there had occurred a rally in most global equity markets on Tuesday (08/09).
Yesterday, stock indices on Wall Street and Europe strengthened significantly as investors were relieved by a late rebound in China's stock market (on heightened expectation of more government stimulus) as well as improved economic data from the Eurozone (the reading for the Eurozone’s second quarter GDP growth was upgraded to 0.4 percent from 0.3 percent previously).
As a result most Asian stock markets immediately went into green territory on today’s trading day. By 09:53 am local Jakarta time, the Shanghai Composite Index was up 1.80 percent, while Japan’s Nikkei 225 had climbed 5.67 percent.
Indonesian stocks and the rupiah are also supported by the Indonesian government’s announcement to unveil a new policy package on Wednesday. Details of this package, aimed at stabilizing the economy, support the rupiah and attract capital inflows, will be released later today. On the other hand, investors need to see action instead of planning only and therefore the announcement of this policy package alone will not significantly influence investors’ decision-making.
Investors are also still cautious ahead of the Federal Reserve’s next policy meeting, scheduled for 16-17 September as a US interest rate hike is still a possibility.