On Friday's trading day (21/06), Indonesia's main stock index (IHSG) was still under the spell of the unrest that emerged because of Ben Bernanke's announcement of a possible stop to the Federal Reserve's quantitative easing program in 2014. Moreover, weak manufacturing data from China also continued to cause negative market sentiments. The IHSG fell 2.48 percent to 4,515.37, its lowest closing since 11 February 2013. Foreign investors sold about USD $228 million more stocks than they bought.
American stock indices rebounded slightly on Friday (21/06) after experiencing large losses the day before. Despite ongoing concerns about the Federal Reserve's possible stop to the quantitative easing program in 2014, limited gains in the Dow Jones Index (0.28 percent) and Standard & Poor's 500 index (0.27 percent) seem to indicate that investors have recovered a bit from their initial shock reaction to Bernanke's speech on Wednesday (19/06). However, 10-year US Treasury yields rose to over 2.5 percent on Friday, the highest level in almost two years as investors keep clearing all fixed income paper. On Wall Street, American financial institutions faced a tough trading day. Citigroup, Morgan Stanley and Bank of America all lost between 1.5 and 2.2 percentage points.
European stock indices were mostly down on Friday because of the Federal Reserve's policy change as well as political unrest in Greece. Political unrest intensified in Greece as the small Democratic Left party (Dimar) withdrew from the fragile coalition government due to a row over the closure of national broadcaster ERT.
Despite panic impacting seriously on the performance of the IHSG (after Bernanke said that the Fed intends to stop its quantitative easing program in 2014), there is also a positive side to a stop to the stimulus program as it marks the continued economic recovery of the United States. An economically healthier USA will need more imports and thus will have a positive effect on its trading partners. This will benefit Indonesia directly, as the USA is one of its most important trading partners in the non oil & gas export sector, but also indirectly, as increased trade between the USA and China, Japan or India will also provide a boost for Indonesia's exports to China and Japan (both being large trading partners of Indonesia).