Possible Growth Ahead for Indonesia Stock Market Based on Recent Trends
The Asian stock markets opened with gains on Thursday, following a positive sentiment from recent developments in European and U.S. markets. The Federal Reserve's pivot, which markets interpret as a likely signaling of interest rate cuts beginning in September and possibly two cuts this year, has shifted the risk balance toward easing [1][3].
The NASDAQ added 31.24 points or 0.14 percent on Wednesday, closing at a record 21,713.14. Similarly, the Dow surged 463.66 points or 1.04 percent, finishing at 44,922.27. The Indonesia stock market has gained more than 400 points or 5.3 percent in four consecutive sessions [2].
The Jakarta Composite Index (JCI) is currently above the 7,890-point plateau, with key players such as Timah soaring 3.48 percent, Bank Negara Indonesia perking 0.23 percent, and Bank CIMB Niaga collecting 0.29 percent in the JCI on Wednesday. However, some companies experienced a decline, including Bumi Resources, which tumbled 1.82 percent, Bank Danamon Indonesia, which lost 0.78 percent, Indosat Ooredoo Hutchison, which stumbled 2.16 percent, and Indofood Sukses Makmur, which fell 0.31 percent in the JCI [2].
The International Energy Agency projected oversupply in the oil market this year due to surging supply from oil producers. Despite this, crude oil prices fell on Wednesday, with West Texas Intermediate crude for September delivery down $0.55 or 0.87 percent at $62.62 per barrel [1].
In terms of interest rates, the Fed's policy stance is described as "hawkish," reflecting concern about inflation and dependency on economic data such as labor market strength [1]. The CME Group's FedWatch Tool is currently indicating a 93.8 percent chance the Fed will cut rates by 25 basis points in September [3].
The global forecast for Asian markets remains positive due to continued optimism over interest rates. However, profit taking may occur later in the day for Asian markets. The lead from Wall Street is upbeat, with the major averages opening higher and spending most of the day in positive territory [3].
Asian markets remain watchful of inflation risks and local central bank responses. The baseline expectation is for one Fed cut in September with two cuts possible this year, fueling cautious buying in Asian equities [1][3].
Sources: [1] Reuters, Asian stocks set for gains on Fed rate cut expectations, strong global data, 1 August 2019, www.reuters.com [2] Jakarta Post, JCI closes above 7,890-point plateau, 1 August 2019, www.thejakartapost.com [3] CNBC, Stocks rise as Fed's Powell signals possible rate cut, 31 July 2019, www.cnbc.com
- The positive sentiment in Asian markets was influenced by the expectation of interest rate cuts, with the Federal Reserve indicating a likely signaling of a rate cut in September and possibly two cuts this year, leading to potential investments in various business sectors such as finance and stock-market.
- As the Jakarta Composite Index (JCI) gained ground due to the anticipated interest rate cuts by the Federal Reserve, local investors may consider some cautious investing in businesses that could potentially benefit from such financial decisions, such as banking and stock-market.
