After rallying for three days to try to end on a new resistance level, the Indonesia Stock Exchange (IHSG) finally had to retreat. As we suspected, the index weakened after its record high. Moreover, American and European indices were weak on Thursday, thus influencing the performance of the IHSG on Friday. Lastly, a number of Asian companies reported weak corporate reports that subsequently impacted on Asian stock indices, including the IHSG.
During today’s trading day, Indonesia’s main index reached its highest level (4528.26) at the start of session one, and its lowest level (4487.84) just before pre-closing. At the end of the day, it stood at 4491.27, a 0.26 percent decline compared to the previous trading day. Trading volume increased, while total value of transactions declined. Foreign market participants mostly sold Indonesian assets, while domestic investors mostly bought.
The Indonesian rupiah (IDR) gained in value, affected by the Japanese yen that strengthened after the Japanese minister of Finance, Taro Aso, said the pace of the yen’s weakening has been too fast. Apart from that, its strengthening was also caused by China’s trade balance that rose more than expected, despite the number being lower than on previous occasions. China’s annual inflation rate was also reported to be lower than before. The Euro was stable against the US dollar after the president of the European Central Bank (ECB) stated that the European economy will recover towards the end of the year. This statement also impacted positively on the rupiah movement.
Asian stock markets were actually going into the red zone on Friday until China's export data and a stable inflation rate pulled it upwards. The reason why the indices went down first was because of Sony Corp’s corporate report that was not well-received and pulled other technology stocks downwards as well. Besides that, market participants estimated that the European economy would be shaken by a strengthening of the euro.
European stock indices rebounded after responding to rising trade balances in China and Germany. Moreover, it was reported that European Union leaders agreed to a significantly reduced 7-year budget in the meeting in Brussels. The latest draft of the 2014-2020 budget sets limits to spending of 960 billion euro (US $1.3 trillion), lower than the previous proposal of 1.047 trillion euro and also lower than the 996 billion euro that was spent in this budget cycle. Increased industrial production in Italy, Sweden and Slovakia also gave a positive sentiment.
The Dow Jones followed European indices' positive trend. It responded positively towards good corporate results of companies, the budget approval in the Euro zone, and the rise of technology stocks, such as Apple Inc, Hewlett-Packard Co, and LinkedIn Corp. Currently, 75 percent of the 341 companies in the S&P 500 that have released financial reports exceeded profit estimates, and 67 percent exceeded sales estimates.
Top Movers – Friday 8 February 2013
|• Eratex Djaja
|• ATPK Resources||15.54%|
|• Steady Safe||8.99%|
|• Centrin Online
|• Apac Citra Centertex|| 11.11%