Indonesia Stocks May Test Support At 3,800 Points
8/10/2011 10:04 PM ET
(RTTNews) – The Indonesian stock market on Wednesday wrote a finish to the six-day losing streak in which it had retreated nearly 470 points or 11.6 percent en route to a four-month closing low. The Jakarta Composite Index finished just above the 3,860-point plateau, although now analysts are forecasting renewed selling pressure when the market opens on Thursday.
The global forecast for the Asian markets is broadly negative again after Wednesday’s breather, with concerns over the stability of the French banking system weighing heavily on investors. Financials figure to lead the market lower, along with property, airline, steel and technology stocks. The European and U.S. markets finished sharply lower, and the Asian bourses are expected to open in similar fashion.
The JCI finished sharply higher on Wednesday as investors went bargain hunting following the recent slide.
For the day, the index surged 128.46 points or 3.44 percent to finish at 3,863.58 after trading between 3,736.04 and 3,883.55.
Among the gainers, Intraco Penta surged 6.9 percent, while Perusahaan Gas Negara jumped 3.9 percent and Timah climbed 4.8 percent.
The lead from Wall Street has headed south again as stocks saw substantial weakness on Wednesday, giving back ground after solid gains on Tuesday. Continued concerns about the global economy contributed to the pullback by the markets. The pullback came as traders continued to digest the Federal Reserve’s troubling remarks regarding the economy.
In a statement following its monetary policy meeting, the Fed noted that economic growth so far this year has been considerably slower than it had expected. The central bank also indicated that it now expects a somewhat slower pace of recovery over coming quarters than it did in June and warned that the downside risks to the economic outlook have increased.
Adding to the concerns about the global economy, the Bank of England trimmed its outlook for U.K. economic growth, saying it now expects GDP to increase by 1.4 percent in 2011 compared to its previous forecast for 1.8 percent growth.
The sharp drop by stocks also reflected concerns about French banks and their exposure to European debt, with some traders worried that France’s triple A debt rating could be at risk.
Among individual stocks, shares of Disney (DIS) fell by 9.1 percent even though the entertainment giant reported third quarter adjusted earnings of $0.78 per share, up from $0.67 per share in the year-ago period. Analysts had been expecting the company to earn $0.73 per share. Disney also reported revenues for the quarter that rose 7 percent to $10.68 billion, exceeding analyst estimates for $10.45 billion.
Meanwhile, Capital One Financial (COF) rose by 0.7 percent after it announced its intention to acquire the domestic credit card business of HSBC (HBC) for a premium of about $2.6 billion. Capital One said the transaction is expected to deliver high teens GAAP and operating earnings accretion in 2013.
The major averages saw further downside going into the close, ending the session near their worst levels of the day. The Dow plummeted 519.83 points or 4.6 percent to 10,719.94, the NASDAQ dropped 101.47 points or 4.1 percent to 2,381.05 and the S&P 500 plunged 51.77 points or 4.4 percent to 1,120.76. With the loss, the Dow more than offset the strong gain it posted in the previous session, hitting a ten-month closing low.