Stock Market Takes a Hit as Positive US Jobs Data Points to Imminent Fed Rate Hike
Jakarta. Indonesian stocks dropped 2.58 percent on Monday as global anxiety over the US Federal Reserve’s imminent rate hike intensified, following the release of the latest unemployment figures from Washington.
The Jakarta Composite Index (JCI) closed at 4,301.36, and is down more than 18 percent for the year. Blue-chip stocks in the LQ45 index closed down 3.5 percent for the day to 723.9.
The rupiah also continued its months-long decline against the US dollar, trading at 14,234 to the greenback. The currency has lost more than 14 percent of its value against the dollar since the start of the year.
The yield on the government’s 10-year bonds rose to 9.0462 percent on Monday from 8.9898 percent last Friday.
Investors around the world are on tenterhooks over an expected Fed rate hike, preceeded by jobs data out of the US that showed unemployment dropping to 5.1 percent in August.
“Investors are still waiting for decision on the Fed during the Federal Open Market Committee meeting this month,” said Maxi Liesyaputra, a senior analyst at KDB Daewoo Securities Indonesia.
The next FOMC meeting is scheduled for Sept. 16-17.
A low unemployment rate would signal the continual improvement of the US economy on the back of steady job creation, which could encourage the Fed to increase its key interest rate, held at near-zero since late 2009. An increase, no matter how slight, would likely send foreign capital, which contributes to some 40 percent of the trading activity in the Jakarta bourse, out of emerging markets like Indonesia.
Some 4.2 billion shares worth a combined Rp 3.24 trillion ($227 million) were traded on the Indonesia Stock Exchange (IDX) on Monday. Foreign investors reported a net sell of Rp 489 billion by the end of the day’s trading, and have sold Rp 7.6 trillion more in shares than they have bought so far this year.
Stocks in the miscellaneous sector took the biggest fall, down nearly 5 percent, followed by the infrastructure sector at 3.75 percent.
Shares in state-controlled natural gas producer PGN fell 11 percent to Rp 2,480 after a report by Fitch Ratings warned of weakening demand for gas due to the economic slowdown.
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