Inflation declines, S&P 500 rises 5.9%

The United States stock market, the S&P 500, increased by 5.9% throughout last week's trading. This weekly performance is the best since last June. The driving factor during last week came from the release of inflation data for October which showed a slowdown to 7.75%, compared to the previous month at 8.2%. Slowing inflation is expected to slow down the policy of increasing interest rates by the Fed. The probability that the Fed will slow down the increase in interest rates by 50 bps (from previously estimated at 75 bps) at next month's meeting, increasing to the level of 85% from the previous 80%. All sectors closed green throughout last week, with the biggest increase from the IT sector at 10%, followed by the Telecommunications sector at 9.2%.

Indonesia's GDP grew 5.72%, higher than market expectations.

Indonesia's GDP (Gross Domestic Product) growth in the third quarter of this year was reported at +5.72% to IDR 2,976 T. This figure was higher than the previous quarter at 5.45%, and also higher than market expectations. This growth is supported by strong Net Exports, as well as growth in investment. The largest growth in investment came from Machinery and Equipment at +36.4%, followed by Motor Vehicles at +17.1%, and Transportation and Communication Equipment at +12.8%. Meanwhile, the unemployment rate was reported to be at 5.86%, which is higher than the pre-pandemic level of 4.94%. However, the average national income increased quite significantly by 12.2% year-on-year.

Foreign exchange reserves have decreased again to maintain the stability of the Rupiah

Indonesia's foreign exchange reserves were reported to be at USD 130.2 billion at the end of October, a decrease compared to the level in September of USD 130.8 billion. This decline was attributed to foreign debt payments and efforts to stabilize the Rupiah. Meanwhile, the depreciation of the Rupiah since the beginning of the year was -10.1%. This depreciation is still smaller, but is equivalent to other developing countries such as the Indian Rupee at -10.2%, and the Thai Baht at -12.3%.

Key Takeaways:

The United States stock market index S&P 500 closed green during last week's trading after the release of inflation data showing the start of a slowdown. Inflation in the US for October was recorded at 7.75%. It is anticipated that the market will also slow down the policy of increasing interest rates by the Fed.

For the domestic economy, Indonesia's GDP for the third quarter grew +5.72%, higher than market expectations. This growth was supported by strong Net Exports and growth in the number of investments. The country's foreign exchange reserves were reported to have decreased again compared to the previous month, due to efforts to stabilize the value of the Rupiah. Currently the value of the Rupiah has depreciated by -10.1% since the beginning of the year. The unemployment rate is reported to be at a higher level than before the pandemic, at 5.86%, however the average national income has increased by 12.2% compared to last year.

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