Although Indonesian Finance Minister Chatib Basri provided positive news to the market by stating that the country's trade deficit (and co-related current account deficit) will probably not be as large in the second quarter of 2014 (as compared to the same quarter in 2013) as well as an expected increase in Indonesian banks' consumer credit, the benchmark stock index (known as Jakarta Composite Index or IHSG) was unable to rise on Wednesday's trading day (04/06). Particularly local investors were eager to sell their Indonesian shares.
Market participants are still concerned to see the Indonesian rupiah exchange rate depreciate further. Based on the Bloomberg Dollar Index, the rupiah depreciated 0.68 percent to IDR 11,890 per US dollar on Wednesday (04/06). Moreover, Asian stock indices were mixed and could therefore not provide support to the Jakarta Composite Index. However, popular manufacturing, trade and property stocks were able to limit the loss of the index. At the end of the trading day, the IHSG had fallen 0.19 percent to 4,932.56 points.
Ahead of the European Central Bank meeting and the release of several US economic data, market participants prefer to invest in the US dollar. Investors expect that US data related to employment are positive and will thus fuel positive sentiments for the US dollar. The strengthening of the US dollar makes it difficult for the rupiah to appreciate, especially when investors are still concerned about the USD $1.96 billion trade deficit that was recorded in April 2014.
Although Japan's Nikkei index is still rising due to the appreciating yen, Hong Kong's benchmark Hang Seng Index and a number of Chinese stock indices weakened due to the continued sell-off in developer and casino operator stocks. Although China's most recent manufacturing index showed an increase in manufacturing activity, it was overshadowed by market participants' concern about the government's efforts to boost growth amid China's property slowdown.
The private Australian Industry Group's performance of services index (PSI) increased 1.3 points to 49.9 in May, just short of the 50 mark that divides growth from contraction. Meanwhile, Australia's gross domestic product expanded 3.5 percent (year-on-year) in the first quarter of 2014. However, both results were unable to support Australian stocks.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.03 percent to IDR 11,810 against the US dollar on Wednesday (04/06).