Jakarta. The failed assassination attempt on former US President Donald Trump has caused uncertainties in financial markets, including Indonesia. Analysts predict government bond yields to rise, while equity investors may become more cautious.

"This incident could boost Trump's popularity and increase his chances of winning the upcoming election," said Pasardana co-founder Hans Kwee on Sunday.

Kwee noted that financial markets generally do not favor a Trump victory in the presidential election. His aggressive trade policies could disrupt the economy, and his strong pro-Israel stance might escalate tensions in the Middle East, leading to higher oil prices and inflation. However, Trump’s support for Russia could potentially end the Russia-Ukraine war, lowering Russian gas prices in Europe and reducing coal prices.

On the impact of the Trump shooting on the Indonesian stock market, Kwee emphasized that this sentiment needs to be monitored further to determine if it will have a long-term effect. "If it has a long-term impact, meaning Trump’s popularity continues to rise, the market might start to correct. However, in the short term, people will be more cautious, and corrections are very likely," he said.

Kwee is confident that the Trump incident will not affect the Federal Reserve's decision on the interest rate. "US inflation data was quite low, with unemployment at 4.1 percent, so the Federal Reserve is likely to cut by 25 basis points in September. Especially with the US election in November, there is a high chance of a rate cut then," he added.

Meanwhile, government bond yields (SUN) are expected to increase to 6.8 percent-7.2 percent for 10-year tenors this week, slightly higher than the previous week's close of 6.944 percent, according to Pefindo Fixed Income Analyst Ahmad Nasrudin.

"I expect the bond market to be under pressure due to increasing negative external sentiment. Geopolitical risks, such as the Trump shooting and rising tensions in Taiwan, will influence the market," explained Ahmad on Monday.

Tokyo’s latest defense white paper warns of increasing risks from China, North Korea, and Russia. "Foreign investors tend to be more cautious and speculative in emerging markets, including Indonesia," Ahmad added.

Markets are also awaiting speeches from Federal Reserve Chair Jerome Powell on the direction of US monetary policy and the European Central Bank (ECB) meeting.

In Asia, attention is on the third plenary session of the Chinese Communist Party and potential major fiscal policy reforms. China's economic growth is expected to slow, and policies related to the medium-term lending facility from the People’s Bank of China will be closely watched.

"Geopolitical sentiment and economic data will influence the performance of domestic bond markets this week. I expect yields to move slightly upwards, assuming stronger geopolitical sentiment than positive economic data releases," he said.

World shares began the week trading mixed and US futures were higher after the shooting incident. 

Markets seemed to take in stride the shooting at Trump’s rally in Butler, Pennsylvania that is being investigated as an attempted assassination of the presumptive Republican nominee.

Shares in Trump Media & Technology Group Corp. jumped sharply in pre-market trading Monday, gaining as much as 70 percent. They were up 52 percent at $46.92 a share on the Nasdaq as of 6 a.m. local time in New York.

Germany’s DAX edged 0.1 percent lower to 18,721.84 and the CAC 40 in Paris declined 0.4 percent to 7,697.04. In London, the FTSE 100 was down 0.1 percent at 8,249.02.

The futures for the S&P 500 and Dow Jones Industrial Average were 0.4 percent higher.

Add as a preferred source on Google +