International News 03 March 2025
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Trump's tariffs hurt Asian Emerging Markets, Thailand and Indonesia hit hardest
Emerging markets in Asia fell sharply after President Donald Trump's announcement of further tariff threats. The Thai and Indonesian stock markets were particularly hard hit, with the Thai benchmark index falling 2.4% and Indonesia's central bank vowing to intervene after the rupiah hit a five-year low. Uncertainty over Trump's trade policies, coupled with concerns over the Federal Reserve's interest rate path, has created a double whammy for Asian equities and currencies. The potential for higher tariffs and a slowdown in global demand has hit Thailand's export-driven economy, while Indonesia is facing capital flight. Trump's vow to impose additional tariffs on China, along with planned levies on Mexico and Canada, has caused market turmoil and heightened concerns about the impact on Chinese goods.
Gloomy economy, worst Rupiah since 1998 and JCI crashes to 6,270 level
The Jakarta Composite Index (JCI) reached its lowest level for the year, closing down 3.31% on Friday 28th February. This eroded the market capitalisation of the JCI to Rp 10,880 trillion or US$656 billion. During the day, foreign investors sold a net Rp 2.91 trillion or US$ 175.57 million. The current level of the JCI is the lowest since the beginning of the Covid-19 pandemic, with a correction of 4.10% in the last three years. The decline in the JCI is accompanied by a fall in the rupiah exchange rate, which closed at IDR 16,596 per US dollar on 28th February. This is the worst level for the rupiah since June 1998. The movement of the JCI is influenced by various factors such as global events, domestic decisions and corporate developments. For example, the movement of stocks is influenced by trade policies and the stance of the Federal Reserve under President Donald Trump. Domestically, Morgan Stanley's downgrade of the MSCI Indonesia Index has also exerted pressure.
Wall Street mixed after US inflation data rises as expected
Wall Street's main indexes had a mixed opening as inflation data for January rose in line with expectations, raising concerns that US President Donald Trump's policies could add to price pressures. The Dow Jones Industrial Average was slightly higher, while the S&P 500 and Nasdaq Composite were both slightly lower. The Personal Consumption Expenditures (PCE) price index rose 2.5% in January, in line with economists' forecasts. Excluding food and energy, the index also rose 2.6% on an annualised basis. Shares of Alphabet and Meta, as well as rate-sensitive banks such as JPMorgan Chase & Co and Bank of America, posted small gains in pre-market trading. Traders are expecting the Fed to cut rates by 61 basis points and investors will be looking for comments from Chicago Fed official Austan Goolsbee.