RTTNews - The Indonesian stock market has extended its winning streak to four sessions, soaring more than 140 points or 7.4 percent on its way to a nine-month closing high. The Jakarta Composite Index is knocking on the door at the 2,000-point plateau, and now investors are betting that the market will crack that level at the opening of trade on Tuesday.
The global forecast for the Asian markets is solidly upbeat, thanks to better than expected economic data around the globe that suggests the economic slowdown may be losing steam. Auto makers may be in focus after General Motors officially declared bankruptcy - although the move has largely been priced in and actually is being met with some optimism. The European and U.S. markets ended sharply higher, and the Asian markets are tipped to trade in the green as well.
The JCI finished sharply higher on Monday, buoyed by better than expected inflation data as commodities led the gainers.
For the day, the index soared 81.74 points or 4.26 percent to close at the daily high of 1,998.58 after dipping as low as 1,917.45.
Among the gainers, nickel miner Inco and Aneka Tambang both jumped 20 percent, while Medco Energy gained 14 percent and Bumi Resources jumped 9.7 percent.
Wall Street puts forth a broadly positive lead as stocks were able to extend their gains for a third straight session on Monday, seeing a notably strong outing for the first trading day of June. The major averages all finished firmly in positive territory, with the NASDAQ and S&P 500 closing at their best levels of the year. Trader confidence was boosted by an influx of largely promising economic figures, with data from the Institute for Supply Management showing a slower pace of contraction in activity in the manufacturing sector in the month of April.
The report showed that the index of activity in the manufacturing sector rose to 42.8 in May from 40.1 in April, with a reading below 50 indicating a contraction. Economists had been expecting the index to edge up to a reading of 42.0. A turnaround in new orders contributed to the improvement in the sector, with the new orders index climbing to 51.1 in May from 47.2 in April. This marked the first time the index has been above 50 since November of 2007.
Further, construction spending unexpectedly increased in the month of April, according to a report released by the Commerce Department, with the unexpected growth reflecting a notable increase in spending on private construction. The Commerce Department also released a separate report showing that personal income unexpectedly rose in the month of April, with the increase partly due to the reduced taxes and increased social benefit payments associated with the government's economic stimulus plan.
On the corporate front, auto giant General Motors officially filed for bankruptcy on Monday morning. The Obama administration said Sunday that it has deemed GM's reorganization plan viable and will provide the company $30.1 billion in debtor-in-possession financing. President Barack Obama addressed GM's bankruptcy filing Monday, stressing that the government is acting as reluctant shareholders with a 60 percent stake in the company and hoping for a swift bankruptcy process.
Obama said that while GM's trip through bankruptcy will likely be longer than Chrysler's swift 31 days, he hopes that the embattled automaker will emerge from the Chapter 11 process quickly. The president defended his administration's actions with regarding to the automaker, stating that his people inherited a severe financial crisis unlike any we have seen in our time that put the government in an unwelcome position.
The major averages saw additional upside in the afternoon dealing and finished just off of their best levels of the day. The Dow closed up 221.11 points or 2.6 percent, at 8,721.44, the NASDAQ finished up by 54.35 points or 3.1 percent, at 1,828.68, and the S&P 500 rose 23.73 points or 2.6 percent to 942.87.
In economic news, Indonesia's annual inflation eased to 6.04 percent in May from 7.31 percent in April, Statistics Indonesia said on Monday. Meanwhile, economists had forecast a rate of 6.2 percent. On a monthly basis, consumer prices were up 0.04 percent in May following a decrease of 0.31 percent in April.
Separately, the agency reported that the country's exports dropped 22.55 percent year-on-year in April. Compared to March, exports dropped 1.81 percent. Meanwhile, imports fell 2.58 percent month-on-month.
Given the fall in inflation and exports, most economists predict the Bank Indonesia to cut its key rate by at least 25 basis points to 7 percent when it reviews its monetary policy on Wednesday. The central bank has made a cumulative reduction of 225 basis points in the key interest rate since December 2008.
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