Indonesia Stock Index Rises 0.54%; Europe and USA Up, Asia Down
On Tuesday (14/05/13), Indonesia's main stock index (IHSG) rose supported by positive Asian stock indices in the first trading session. But this pillar of support did not last for long as the Asian stock indices weakened afterwards, which impacted on the performance of the IHSG. Pressures of profit taking remained as the IHSG is still near its record high level but foreign investors - being net buyers of Indonesian stocks - helped to offset profit taking, resulting in a 0.54 percent gain to 5,081.94 points.
The IDR rupiah rose slightly as Indonesia's central bank rate was kept at 5.75 percent (in line with market expectation). The Euro weakened as the European Central Bank (ECB) may cut its interest rate and because market participants responded to lower than expected economic data (particularly from Germany). The US dollar, on the other hand, gained due to the Federal Reserve's plan to cut its massive bond buying program soon.| Source: Bank Indonesia
Most Asian stock indices fell due to a general lack of sentiments and due to JP Morgan Chase & Co's downgraded outlook for economic growth in the Asia Pacific. In particular China's forecast was downgraded as restrictions in its property sector (to avert a property price bubble) are believed to reduce profit of Chinese property companies. JP Morgan lowered China's Q2-2013 forecast to 7.8 percent from a previous 8.0 percent. Full-year economic growth of China is now set at 7.6 percent instead of the initial 7.8 percent.
European stock indices gained as a number of companies posted good corporate results, such as ICAP Plc, EADS, Severn Trent Plc, and European Aeronautic Defence & Space Co. Moreover they were supported by low inflation figures in a number of European countries, the Eurozone's higher monthly industrial production, and France's increased current account. It caused most European indices to rise, despite Germany's lower ZEW economic sentiment.
American stock indices rebounded supported by a number of good company reports, such as Fusion-io Inc, Bank of America and Citigroup. There is also a general positive atmosphere as the American economy is believed to be recovering. A rise in NFIB small business optimism was immediately responded to positively by investors, thus offsetting any negative sentiment brought on by foreign markets.
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