RTTNews - Ahead of Monday's market holiday for Independence Day, the Indonesian stock market had finished lower in two of three sessions since the end of the two-day winning streak that saw it collect more than 50 points or 2.1 percent en route to a fresh 13-month closing high. The Jakarta Composite Index closed below the 2,390-point plateau, and now analysts are predicting that those losses will accelerate at the opening of trade on Tuesday.
The global forecast for the Asian markets is broadly pessimistic as markets around the world plunged on fears that an economic recovery is not quite as close as many had believed. Resource stocks are expected to see continued pressure - particularly the steel, oil and gold stocks - while the financials and properties also are forecast to see heavy selling pressure. The European and U.S. markets were sharply lower, and the Asian markets are tipped to follow that lead.
The JCI finished modestly lower on Friday, as losses among the telecoms and the commodities were offset by gains among the plantation stocks.
For the day, the index eased 9.62 points or 0.4 percent to close at 2,386.86 after trading between 2,370.09 and 2,411.90. Volume was 6.85 billion shares worth 5.26 trillion rupiah. There were 114 decliners and 78 gainers, with 61 stocks finishing unchanged.
Among the decliners, Aneka Tambang lost 2.75 percent, while Timah fell 1.1 percent, Astra International declined 3.7 percent, Telekomunikasi Indonesia eased 0.6 percent and Berlian Laju Tanker shed 2.4 percent. Bucking the trend, Astra Agro Lestari added 2.45 percent and London Sumatera Plantations gained 1.9 percent.
The lead from Wall Street is brutally negative as stocks saw a sharp pullback on Monday, with last week's disappointing data on the health of the consumer sparking a broad-based sell-off in equities. The major averages all finished substantially lower, as some speculated that the markets rose in spite of weak fundamentals.
Also deflating traders' mood was news that Lowe's (LOW) second quarter earnings and revenues fell short of estimates. The home improvement retailer also provided disappointing guidance.
Nonetheless, some of the pessimism was moderated by the release of a report from the Federal Reserve Bank of New York showing that conditions for New York manufacturers improved for the first time in well over a year in the month of August. The New York Fed said its general business conditions index rose to 12.1 in August from a negative 0.6 in July, with a positive reading indicating an expansion in the manufacturing sector. Economists had been expecting the index to increase more modestly to 3.0.
Stocks rose by a modest margin after the National Association of Home Builders released its report on homebuilder confidence in the month of August, showing that its homebuilder confidence index rose to its highest level in over a year. The report showed that the NAHB/Wells Fargo Housing Market Index rose to 18 in August from 17 in July. With the increase, which came in line with economist estimates, the index rose to its highest level since June of 2008.
The major averages remained stuck in the red going into the close, finishing near their worst levels of the day. The Dow closed down by 186.06 points or 2 percent at 9,135.34, the NASDAQ fell by 54.68 points or 2.8 percent to 1,930.84 and the S&P 500 slipped by 24.36 points, or 2.4 percent to 979.73.
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