RRI.CO.ID, Jakarta - China's manufacturing data showed some improvement in August but remained in contraction. The country's manufacturing index rose to 49.8, slightly better than the 49.0 recorded in the previous month.
Following this economic news from China, most Asian stock markets traded lower this morning. Indonesia's main stock index (IHSG) was also dragged down, opening at a weaker level of 6,511.
At the same time, the Indonesian currency also lost value during early trading. The Rupiah fell and is currently trading at around 17,750 per US Dollar.
This weakness occurred because several global factors are strengthening the US Dollar. For instance, the US Dollar Index recently climbed to a higher level of 99.6.
Additionally, the 10-year US Treasury yield rose to around 4.7%, which is notably higher than last weekend. Beyond these financial numbers, investors are very worried about rising conflicts in the Middle East.
Iran, China, and Russia are planning to meet at the upcoming Shanghai Cooperation Organization (SCO) Summit. This gathering could result in joint policies to push back against United States pressure.
This resistance comes after China strongly opposed recent economic sanctions from the US. The US had sanctioned China for maintaining its economic partnerships with Iran.
In response to these global issues, crude oil prices jumped to $90 per barrel. Meanwhile, gold prices were pushed down to roughly $4,423 per troy ounce, or about 2.53 million Rupiah per gram.
Overall, the escalating tensions between the US and Iran is creating panic among investors. They are increasingly worried that global economic conditions will get much worse in the near future.
Writer: Gunawan Benjamin (Economist, Islamic University of North Sumatra)
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