JCI has the opportunity to weaken in the next week, take a look at the following 8 catalysts

Reporter: Wahyu Tri Rahmawati | Editor: Wahyu T. Rahmawati

KONTAN.CO.ID – JAKARTA. Composite Stock Price Index (IHSG) rose 2.13% or 103.03 points to 4,945.79 at the end of trading Friday (25/9). Even though it strengthened on the last day, JCI was still down 2.24% in a week.

Hans Kwee, Director of Anugerah Mega Investama estimates, the JCI has the opportunity to strengthen at the beginning of the week and tends to weaken in the middle until the end of next week. “JCI is moving with levels support at levels 4,820 to 4,754 and resistance at the level of 4,978 to 5,187 with a tendency to weaken in the next week, “said Hans in his research, Sunday (27/9).

According to Hans, some of the sentiments that might influence the JCI movement in the fifth week of September 2020 are:

1. Global financial markets received negative sentiment from the development of a fiscal stimulus package to deal with the impact of the Covid 19 pandemic. It was reported that the Democratic Party in the United States House of Representatives (US) is preparing a plan for a coronavirus stimulus package worth US $ 2.2 trillion.

It is hoped that this package can be voted on next week. This package is very important to help the US out of recession. In the midst of an increase in Covid-19 cases and a re-lockdown plan that will disrupt economic recovery, fiscal stimulus is urgently needed.

Federal Reserve officials last week spoke of the importance of more fiscal stimulus as monetary policy has limited effectiveness in restoring the economy. This statement lowered the credibility of the Fed but prompted the government and parliament to immediately pass new fiscal stimulus to counter the impact of the Covid-19.

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2. Financial markets also face US political uncertainty ahead of elections in November. It is reported that President Donald Trump has refused to commit to a peaceful transfer of power if he loses the presidential election. This makes it very possible that the election results will be disputed.

Republicans have denied President Donald Trump’s refusal to commit to a peaceful transfer of power if Trump loses the November election. This has strengthened the dollar index and weakened the rupiah exchange rate. In addition, the political tension that was heating up ahead of the US election made it difficult to find a common ground for discussing the fiscal stimulus package that market players awaited.

3. US economic data is likely to be mixed but shows signs of slowing recovery. Jobless claims that ended on September 19 totaled 870,000, more than economists forecast at 840,000 and higher than the previous week’s 866,000.

Meanwhile, the number of continuing jobless claims decreased to 12.58 million from the previous 12.75 million but was worse than market consensus at 12.30 million. Both figures are considered disappointing and indicate the US economic recovery has stalled. On the other hand, Congress has not been able to produce a new fiscal stimulus package to help the economy recover due to the Covid-19 pandemic.

Also Read: Capitalization on the stock market during the week shrank 2.15% or Rp 126.53 trillion

4. An increase in covid-19 cases has occurred in many countries. In the US there is an increase in cases in the Midwest. France and Britain recorded new daily recorded cases of Covid-19 infection on Thursday last week. The UK reported an additional 1,252 new cases a day to 6,178.

There are concerns that the second wave of Covid 19 will occur in several European countries, which has prompted several countries such as Britain, Germany and France to implement new restrictions. The Spanish government recommended implementation lockdown in the city of Madrid after cases exceeded 700,000 and is the highest in the country of the Western European region. Plan lockdown plus less fiscal support and reduced liquidity will weigh on countries’ fourth-quarter performance.

5. Chicago Fed Chairman Charles Evans said further quantitative easing may not provide an additional boost to the US economy. This means that there is no additional monetary stimulus from the central bank to push the economy out of recession. Charles also hinted that it is possible for the Fed to raise interest rates before inflation starts to average 2%. This causes the flow of funds back to the US and makes the dollar tend to rise and makes the rupiah tend to weaken.

Also Read: This is the cause of the JCI to weaken 2.24% in a week