The Fed will slow down interest rate increases, S&P 500 rises 1.5%

The United States stock market S&P 500 closed green with an increase of 1.53% throughout last week's trading. Last week started with negative sentiment regarding the possibility of China extending its zero-Covid policy. Market players then received good news from the Fed which indicated that interest rate increases would soon slow down. In the future, interest rate increases will be carried out on a smaller scale, thereby encouraging positive sentiment. In other economic news, orders for durable goods increased higher than expected, the unemployment rate rose again to its highest level in the last 3 months, and home sales increased followed by an increase in mortgage applications of 2.2%. All sectors in the S&P 500 index closed in green, with the highest increase in the Utilities sector at +3%, Materials at +2.9%, and the Financials sector at 2.1%.

2023 UMP announced to increase by 10%, November inflation estimated at 5.6%

The Ministry of Manpower announced in a newly released regulation in Permenaker 18/2022 regarding the regulation of a minimum wage increase of +10% for 2023. This regulation was made with considerations to maintain people's purchasing power. Based on the Ministry of Manpower's tests, this regulation will increase the average minimum wage in Indonesia to the level of 2.98 million rupiah.

Bank Indonesia predicts inflation in November will increase by 0.3% compared to the previous month to a level of 5.6%. This increase came from an increase in transportation prices, especially airplane ticket prices from increased public demand during the holiday season, as well as an increase in airplane fuel prices. Apart from that, inflation is also affected by the increase in food prices. The price of shallots was observed to have increased by 3.5% from the previous month, and the price of rice increased by 0.3% compared to the previous month. The rupiah exchange rate has depreciated by 10.2% since the beginning of the year, where this level of depreciation has caught up with the depreciation of other developing country currencies such as the Indian Rupee, Malaysian Ringgit, and Thai Baht.

Summary of G20 Events in Bali, Indonesia

At the last G20 event, the greeting between American President Joe Biden and Chinese President Xi became the public spotlight. This was captured by the public due to the desire of both parties to improve relations between the two countries. According to analysts, this could signal the end of the US-China economic cold war which could ease political tensions in the Asia Pacific region, so this is good news for the outlook for future economic growth. Apart from that, President Jokowi highlighted several concrete actions during the G20 meeting, including:

1. The creation of a pandemic deposit, which has so far raised US$1.5 billion from G20 members and philanthropic institutions.
2. Establishment of the Resilience and Sustainability Trust under the IMF amounting to US$ 81.6 billion to help countries experiencing crises.
3. Energy Transition Mechanism Program worth US$20 billion for Indonesia to accelerate the transition from coal-fired power plants.
4. Energy Transition Mechanism Program worth US$20 billion for Indonesia to accelerate the transition to the Global Biodiversity Framework (GBF) commitment which includes efforts to ensure the conservation of 30% of global land and at least 30% of global seas and oceans by 2030, including a reduction in coal-fired power plants.

Key Takeaways:

Energy Transition Mechanism Program worth US$ 20 billion for Indonesia to accelerate the transition. Global Biodiversity Framework (GBF) commitment which includes efforts to ensure the conservation of 30% of global land and the United States stock market index S&P 500 closed higher at least 30% of global seas and oceans by 2030, including reductions from coal-fired power plants. as much as 1.5% during last week's trading supported by a signal from the Fed that it will slow down the increase in interest rates in the future, thereby encouraging positive investor sentiment.

For the domestic economy, the Ministry of Manpower released Minister of Manpower Regulation 18/2022 regarding regulations on increasing minimum wages +10% for 2023. This regulation was made based on consideration to maintain people's purchasing power. In the news other economies, Bank Indonesia predicts inflation for the month November at 5.6%. This increase comes from increasing Airline ticket prices on demand are higher during holiday season and rising airplane fuel prices, too holiday season and rising airplane fuel prices, as well as rising food prices such as onions and rice, respectively 3.5% and 0.3%.

The highlight of the last G20 event included intentions for improvement relations between the US and China are indicating an easing economic cold war between the two countries. This too can reduce political tensions in the Asia Pacific region so that This is good news for the outlook for economic growth in the future.

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