Market Commentary and Intraday News

Losing Streak Likely Over For Jakarta Stock Market

346 days ago

(RTTNews) - The Indonesia stock market has closed lower now in consecutive trading days, giving up more than 15 points or o.4 percent in the process. The Jakarta Composite Index finished just above the 3,825-point plateau, and now traders are looking for a measure of traction when the market kicks off trade on Monday.

The global forecast for the Asian markets is cautiously optimistic on bargain hunting following heavy damage through much of last week. Positive economic data from China over the weekend adds to the positive sentiment, with better than expected numbers for exports, trade balance, inflation, retail sales and industrial output. In addition word comes from Europe that Spain will accept a bailout of $125 billion for its ailing banking sector, which investors hope will bring stability to the embattled Eurozone.

The JCI finished modestly lower on Friday as softness from the financial shares was offset by support from the resource stocks.

For the day, the index fell 15.26 points or 0.40 percent to finish at 3,825.33 after trading between 3,805.34 and 3,840.08 on volume of 1.880 billion shares.

The lead from Wall Street is firmly positive as stocks showed a significant turnaround over the course of the trading day on Friday after coming under pressure in early trading as traders expressed renewed optimism about the financial situation in Europe.

The early weakness was partly due to waning optimism about the possibility of further stimulus from the Federal Reserve following Fed Chairman Ben Bernanke's testimony before the Joint Economic Committee on Thursday. While Bernanke said that Fed "remains prepared to take action" if the economic situation worsens, he made no explicit reference to further easing measures.

Disappointing trade data from Germany also contributed to the initial downward move, with the Federal Statistical Office reporting a 4.8 percent drop in imports in April.

The subsequent turnaround by the markets was partly due to optimism about the outcome of a weekend meeting of European financial officials, with rumors correctly suggesting that Spain could be in line for a bailout.

Some traders also likely used the early weakness as an opportunity to pick up stocks at reduced levels, doing some bargain hunting after the recent pullback.

In U.S. economic news, the Commerce Department reported that the U.S. trade deficit narrowed to $50.1 billion in April from a revised $52.6 billion in March. Economists had expected the deficit to narrow to $49.3 billion from the $51.8 billion originally reported for the previous month. The narrower trade deficit for the month came as the value of U.S. imports fell at a faster rate than the value of U.S. exports.

A separate report from the Commerce Department showed a slightly bigger than expected increase in wholesale inventories in April along with a notable increase in wholesale sales.

The major averages bounced off their early lows and climbed firmly into positive territory as the day progressed as the Dow rose 93.24 points or 0.8 percent to finish at 12,554.20, while the NASDAQ advanced 27.40 points or 1 percent to end at 2,858.42 and the S&P 500 climbed 10.67 points or 0.8 percent to 1,325.66. For the week, the Dow jumped 3.6 percent, while the NASDAQ and the S&P surged up by 3 percent and 2.9 percent, respectively.

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