Over the past couple of trading days Indonesian stocks and the rupiah have been under pressure due to increasing speculation about a sooner-than-expected Fed Funds Rate hike in the USA. These pressures have caused some volatile behavior in the performance of emerging market stocks and currencies. Today, however, most Asian stocks moved higher with the notable exception of Japanese shares that were plagued by the release of weak April trade data. Meanwhile, the G-7 meeting last weekend failed to result in an agreement on a plan to revive global growth.

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Both the Indonesian rupiah and Jakarta Composite Index (IHSG) are under pressure on Thursday (19/05) as renewed speculation about a sooner-than-expected interest rate hike in the USA puts severe pressure on emerging market assets, while the US dollar is appreciating sharply. Based on the minutes of the 26-27 April Federal Reserve meeting, more and more analysts believe that another Fed Fund Rate hike could come as early as June 2016.

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Turnover in Indonesia's food and beverage sector reached IDR 400 trillion (approx. USD $30.3 billion) in the first quarter of 2016, up 7.55 percent from the same period one year earlier. Adhi Lukman, Chairman of the Indonesian Food and Beverage Association (GAPMMI), is content to see the growth pace, particularly because it is supported by rising sales volumes. In Q1-2015 the growth pace in Indonesia's food and beverage industry was higher (at +8.16 percent y/y) but this growth was more supported by higher prices rather than rising sales volumes.

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Most Asian stocks are in the red zone on Monday (09/05) and Indonesia's benchmark Jakarta Composite Index is leading declines. At the end of the first trading session Indonesian shares were down 1.15 percent at 4,767.32 points. Important issues that influence the performance of Asian stock markets are China's April trade data and US April jobs data. Meanwhile, crude oil prices continued to rally and the yen finally weakened against the US dollar (hence supporting Japanese stocks).

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Indonesian cosmetic companies listed on the Indonesia Stock Exchange have not yet seen earnings gain momentum in the first quarter of 2016. Martina Berto is the only listed cosmetic producer that managed to post rising net sales and net profit in Q1-2016. Meanwhile, the two other cosmetic firms - Mustika Ratu and Mandom Indonesia - saw their net sales decline in the same period due to weak purchasing power and household consumption in Southeast Asia's largest economy. Moreover, cosmetic firms have been offering discounts in order to raise sales volumes.

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Ahead of central bank meetings in the USA and Japan, and amid a volatile performance of crude oil prices the benchmark stock index of Indonesia (Jakarta Composite Index) fell 1.33 percent to 4,814.09 points on Tuesday (26/04), leading losses among Asian indices. The Federal Reserve's two-day FOMC meeting, scheduled to start today, is making investors cautious as this meeting may give some clues about the possibility of a June Fed Fund Rate hike. Overall, the performance of Asian stock markets was rather mixed on Tuesday. This performance was also attributed to weak cues from Wall Street and Europe overnight.

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Asian stocks did not have a good start of the week. Most Asian stocks fell on Monday (25/04) in line with retreating oil prices, concerns that the US Federal Reserve may be hinting at further monetary tightening in its upcoming policy meeting, as well as concerns about China's debt and commodities markets. It all resulted in curbed demand for higher-yielding yet riskier Asian assets. Indonesia's benchmark Jakarta Composite Index fell 0.73 percent to 4,878.86 points, while the Indonesian rupiah depreciated 0.04 percent to IDR 13,199 per US dollar (Bloomberg Dollar Index).

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The central bank of Indonesia (Bank Indonesia) kept its key interest rate (BI rate) at 6.75 percent at the April policy meeting. This decision was in line with expectations. During the three policy meetings conducted in the January-March 2016 period Bank Indonesia had already cut its BI rate by a combined 75 basis points as inflation and the current account deficit are under control, while the Indonesian rupiah has been strengthening against the US dollar since the start of 2016. Last week, Bank Indonesia announced it will adopt the seven-day reverse repurchase rate (reverse repo) to replace the existing BI rate as the bank's key monetary tool.

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Stock markets in Asia are plagued by the failure to see an 'oil freeze deal' reached at OPEC's oil talks in Doha over the weekend. Saudi Arabia announced it will not curtail its oil production as long as other oil producing countries do not curtail production as well. It specifically wants its geopolitical rival Iran to join the production freeze. However, Iran decided not to join the meeting and ruled out any output cuts after recently rejoining the international oil market (due to the lifting of sanctions). Iran indicated it is not cut any output before its oil production reaches the pre-sanction level.

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Stocks in Asia were mostly up on Tuesday (12/04) supported by the weaker Japanese yen (retreating after a seven-day rally again the US dollar) and rising commodity prices (with crude oil touching a 2016 high at USD $43 per barrel after the US dollar weakened). Indonesia's benchmark Jakarta Composite Index rose 0.89 percent to 4,829.57 points, while the rupiah appreciated 0.14 percent to IDR 13,115 per US dollar (Bloomberg Dollar Index). Several analysts claim that the positive performance of Indonesian assets was also due to the government's plan to cut the corporate income tax to 20 percent and raise the non-taxable personal income tax by 50 percent.

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The weak stock indices in Europe and USA at the end of last week had a negative impact on stock indices in Asia on Monday (27/05/13), including Indonesia's main stock index (IHSG). Investors rushed to reduce their stock portfolios, which resulted in an 1.36 percent fall to 5,085.14 points. At the end of last week, the IHSG had formed a green candlestick but today there were no continued positive signals as the market lacked positive sentiments. But a number of rising Asian indices and the positive openings of European stock indices managed to support the IHSG a bit.

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Various negative sentiments made investors decide to engage in profit taking today (23/05). As Indonesia's main stock index (IHSG) had already reached the overbought area, it is highly susceptible of profit taking in case some negative news is released. But this time there were quite a lot of matters that made a negative impact: weak American indices on Wednesday (22/05) responding to the FOMC meeting, a spike in Japan's government bond yields, and Chinese manufacturing data that seems to indicate a contraction.

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Although Indonesia’s government stresses the need to relieve pressure on the state budget (by raising the price of subsidized fuel next month), it plans to allocate an additional IDR 16.1 trillion (USD $1.65 billion) to this year’s fuel subsidy budget. The additional allocation, which covers fuel, LPG and vegetable fuels, will raise government expenditure on fuel subsidies to IDR 209.9 trillion (USD $21.50 billion) from the IDR 193.8 trillion drafted in the original 2013 state budget (APBN 2013). Total energy subsidies will grow to IDR 309.9 trillion this year.

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American stock indices that refrained from staying in the green zone at the end of Monday's trading session (20/05/13) made market participants less enthusiastic to invest in Asian stocks. Indonesia's main stock index (IHSG) was one of the indices that felt this impact as a lack of positive sentiments blocked it from rising to another record high level. Investors were also concerned about profit taking because the index had reached the overbought level. When European indices opened weak on Tuesday it increased downward pressures on the IHSG.

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Various reasons explain why Indonesia's main stock index (IHSG) managed to reach another record high on Monday (20/05/13) at 5,214.98 points, an 1.35 percent gain. Foreigners were back chasing Indonesian stocks (particularly blue chips), Asian indices were up (led by Hong Kong's Hang Seng Index), the listing of Bank Nationalnobu (NOBU) which gained 14.67 percent on its first trading day, positive European openings, and the positive response towards Indonesia's new Finance minister, Chatib Basri, regarded as an independent policy maker.

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The pace of the upward movement of Indonesia's main stock index (IHSG) was beyond expectation. While American and European stock indices were weak on Thursday (16/05/13) and Hong Kong's HSI as well as South Korea's KOSPI were closed due to holidays, it did not bring a negative impact on the IHSG. Particularly consumer and coal miner stocks supported the IHSG's rise. At the end of Friday's trading day (17/05/13), the IHSG hit a new record high level: 5,154.68 points, an 1.32 percent increase.

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Positive American and European stock indices on Tuesday (14/05/13) made a good impact on Asian stock indices on Wednesday (15/05/13), including Indonesia's main index (IHSG) which is heading towards the 5,100 points line. Although many foreign investors were eager to sell their Indonesian assets, support from other Asian stock indices kept the IHSG within the green zone. At the end of the trading day, it stood at 5,089.88 points, a 0.16 percent rise.

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On Tuesday (14/05/13), Indonesia's main stock index (IHSG) rose supported by positive Asian stock indices in the first trading session. But this pillar of support did not last for long as the Asian stock indices weakened afterwards, which impacted on the performance of the IHSG. Pressures of profit taking remained as the IHSG is still near its record high level but foreign investors - being net buyers of Indonesian stocks - helped to offset profit taking, resulting in a 0.54 percent gain to 5,081.94 points.

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After setting a new record last Friday, Indonesia's main stock index (IHSG) lost its strength on Monday (13/05/13). A number of factors were behind the decline. Foreign investors mostly sold their Indonesian assets as the record high level of the IHSG made it tempting to engage in profit taking. Moreover, the still unclear policy regarding Indonesia's subsidized fuel causes uncertainties. Lastly, Asian stock indices were mixed while European indices opened lower on Monday.

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Indonesia's main stock index (IHSG) returned to where it belonged: above the level of 5,000 points. Apparently Moody's threat to downgrade Indonesia's credit rating, as has been done by Standard & Poor's a few days ago, did not leave a big impression on market participants. As a result, the IHSG rose 1.02 percent to 5,042.79 and thus almost repaired the damage done at the end of last week. Other Asian stock indices as well as positive openings in Europe also provided good support today.

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