JAKARTA – The trade agreement between the United States and China reached in Switzerland over the weekend has lifted sentiment in global markets at the start of the week.

Liza Camelia Suryanata, Head of Research at Kiwoom Sekuritas, said the outcome of the negotiations is expected to support an increase in the Jakarta Composite Index (JCI) during Wednesday’s (14/5) trading.

However, Liza noted that the US-China deal is only temporary. As previously reported by IDNFinancials.com, the world’s two largest economies agreed to lower import tariffs on each other for a 90-day period.

“Because the agreement does not resolve structural issues, JCI’s gains are likely to be limited and remain vulnerable to correction,” Liza wrote in a research note.

She added that several analysts from global financial institutions such as Macquarie said the US-China negotiations should not be viewed as a long-term peace solution, but merely a “mutual tactical step”.

Meanwhile, analysts at Citi highlighted that the US-China trade compromise may not receive full support from Donald Trump’s political base.

Reflecting on the 2018–2019 trade war, Liza said Kiwoom Research remains cautious in responding to the ongoing US-China trade developments. “The 90-day pause at the time did not lead to any concrete outcomes,” she added.

In the near term, Liza said JCI is prone to correction in the 6,970 to 7,000 range, the latter serving as a psychological resistance level.

“If this critical level is broken through, a path could open for JCI to target 7,100–7,150 by the end of this month,” Liza concluded. (KR/ZH)