A surge in plantation, consumer, infrastructure and financial stocks has pushed the Indonesia Stock Exchange (IHSG) higher up the path of record-breaking highs on Friday, despite mixed Asian stock markets and a weak opening of European stock indices. Moreover, continued reports about good corporate results of listed companies convinced market participants to engage in trading, despite an already overbought market.
During Friday's trading day, the IHSG reached its highest level (4,616.00) in the middle of session two, and its lowest level (4,588.24) at the start of session one. In the end, it stood at 4609.79, a 0.46 percent increase compared to the previous trading day. Trade volume and total value of transactions declined with foreign investors mostly buying Indonesian stocks and domestic investors mostly selling their Indonesian assets.
Indonesia's IDR rupiah went downwards due to current mixed sentiments. On the one hand, the strengthening of the US dollar after USA's Jobless Claims fell more than expected and the support for a stricter monetary policy of high Federal Reserve official James Bullard, who fears potential future effects of a stop to the current monetary stimuli. On the other hand, high official of the Bank of England (BOE), Ben Broadbent, supports an easing monetary policy, although he is unsure whether that policy can support economic recovery significantly. Appreciation of the US dollar also emerged after the Euro weakened due to poor gross domestic product reports in Europe.
Asian stock markets were mixed but with a general weakening trend after the Japanese yen went up in combination with disappointing company reports such as Micro Inc. and Rio Tinto Group. The appreciation of the yen happened after news spread that the leader of the Daiwa Institute of Research, who is also a deputy of the Bank of Japan (BOJ), will be nominated as a candidate for the position of governor of Japan's Central Bank.
European stock markets were mixed as well but with a upward trend after various companies reported positive corporate performance and due to an improving European trade balance, although Italy's trade balance suffered a decline, while England's retail sales weakened. Market participants were positive about the meeting between the finance ministers (G20) in Moscow as leaders intend to avoid the outbreak of a global currency war.
In the United States market participants are mostly waiting for results of the G20 meeting. American stock markets were supported by the NY Empire State Manufacturing Index and the Consumer Sentiment Index, but only temporarily. Investors are also waiting for steps of America's parliament that is facing the deadline to agree or disagree on a deal to avoid budget cuts. The Senate Democrats announced an US $110 billion plan to delay cutting federal spending, including a tax increase. But this will probably be rejected by the Republicans, who previously already stated not to accept it.