Asian stocks is set to open higher today following gains in global markets. U.S. stocks closed higher on Friday (June 1) after the release of better-than-expected jobs numbers. The U.S. economy added 223,000 jobs last month, topping a forecast of 188,000. U.S. jobs data bolstered optimism in the world’s largest economy, all but firming an interest rate increase from the Federal Reserve later this month.

European stock markets also closed deep in the green on Friday buoyed by a rally on Wall Street and despite trade war concerns, after news that Italy’s two largest political parties reached an agreement to form a coalition government and Spain’s parliament voted to oust Prime Minister Mariano Rajoy following a corruption scandal.

Still, a potential trade war may cast a shadow on markets. China warned it will withdraw from commitments it made on trade if U.S. President Donald Trump carries out a separate threat to impose tariffs on the Asian country, while the U.S. is headed for a showdown with America’s allies at a Group of Seven summit this week, Bloomberg reported. This week the US will publish trade balance, China trade balance and inflation, also Australia Q1 GDP growth.

Meanwhile, crude oil extended the fall. West Texas Intermediate (WTI) crude extended a decline as rising U.S. output overshadowed a surprise drop in stockpiles, with traders also focused on whether Saudi Arabia and Russia will boost production. Nymex’s crude oil fell 1.78% to US$65.85 per barrel in Asian trading this morning.

For Indonesia, investors today will wait for the inflation data for May. The composite index of the Indonesia Stock Exchange (IDX) closed lower 0.46% at 5,983 on Thursday last week, but closed off its low at 5,935. Foreign investors booked a net sell of Rp466 billion, bringing year-to-date net sell to Rp40.33 trillion. The rupiah strengthened to Rp13,951 against the US dollar on Thursday last week.

Indonesia’s Central bank (Bank Indonesia/BI) reported that economic liquidity had a stable growth in April this year, as reflected in the 7.4% growth in circulating money. The growth is supported by the expansion of government financial capacity and acceleration of credit growth. Credit grew 8.6% to Rp4,807.5 trillion in April.

Meanwhile, the  global rating agency Standard and Poor’s (S&P) has on Thursday last week affirmed Indonesia’s Sovereign Credit Rating at investment grade level (BBB- /stable outlook). The key factors that support the decision are the government’s relatively low debt levels and its moderate fiscal performance and external indebtedness.

BI Governor Perry Warjiyo stated that “S&P’s affirmation on Indonesia’s rating reflects Indonesia’s strong economic fundamental and credible policy mix framework.” The affirmation further bolsters investors’ confidence on Indonesia’s economic prospect amidst the ongoing global uncertainty. S&P had previously raised Indonesia Sovereign Credit Rating to BBB-/Stable Outlook on May 19, 2017.

Meanwhile, state budget implementation is sound beyond expectations. At the end of April 2018, tax revenue had grown 14.9%, with Value Added Tax increasing by 14.1% and corporate income tax by 23.6%. Broad-based tax revenue growth is indicative of vibrant economic activity and a flourishing business community.

For 2019, BI estimated economic growth in the range of 5.2-5.6%, driven by rising investment, higher commodity price, and fiscal stimulus. BI also forecast the economic growth of 5.1-5.5% in 2018. BI expects inflation of 2.5-4.5% in 2019 and the rupiah currency in the range of Rp13,800-14,100 per US Dollar. The current account deficit is estimated at 2-2.5% in 2019.

Finance Minister Sri Mulyani Indrawati, meanwhile, projected economic growth in the range of 5.4-5.8% in 2019, compared to 5.4% target for this year. The Finance Ministry sets fiscal deficit in 2019 in the range of 1.6-1.9% of gross domestic product (GDP). The Government expects to set the rupiah assumption at 13,700-14,000 a dollar on average next year. Indonesian crude oil prices is set to average at $60-70 per barrel.

By Yohannes Obor

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