The Indonesian stock market has finished higher now in four straight sessions, adding more than 150 points or 9 percent along the way. The Jakarta Composite Index is closing on resistance at 1,730 points - and now analysts say that the market could breeze right through that level at the opening of trade on Monday.
The Asian markets draw a fairly positive if lukewarm global forecast as many of the bourses return to action following Friday's Labor Day holiday. Some economic news out of the United States was not as bad as expected, as were some corporate results. Most of Europe was closed, but for a flat performance from London's FTSE, while the U.S. bourses ended slightly higher - and the Asian markets are also expected to move higher.
One of the few markets open on Friday, the JCI finished modestly higher amidst thin trade, powered by gains among the financial stocks. For the day, the index was up 6.82 points or 0.40 percent to close at 1,729.58 after trading between 1,701.99 and 1,738.71. Among the gainers, Bank Danamon advanced 2.4 percent, while Bank Central Asia jumped 3.7 percent and Bank Rakyat Indonesia gained 1.7 percent.
The lead from Wall Street is cautiously optimistic as stocks showed a lack of direction throughout the trading day on Friday, with the major averages bouncing back and forth across the unchanged line before ending the day modestly higher. The lackluster performance came as traders digested some mixed earnings and economic news.
On the economic front, the Institute for Supply Management released its report on manufacturing activity in the month of April, showing that activity continued to contract for the month but at a much slower than expected pace. The ISM said its index of activity in the sector rose to 40.1 in April from 36.3 in March, although a reading below 50 indicates a continued contraction in the sector. Economists had been expecting a more modest increase to a reading of 38.4.
Separately, the Reuters/University of Michigan's consumer sentiment index for the month of April was unexpectedly upwardly revised to a reading of 65.1 from the previously reported reading of 61.9. The Commerce Department also released its report on factory orders in the month of March, showing that orders fell by a bigger than expected 0.9 percent following a downwardly revised 0.7 percent increase in February.
In earnings news, Chevron (CVX) closed notably higher after the oil giant reported first quarter earnings that fell sharply year-over-year but came in better than analysts had expected. Shares of Chevron ended the day up 1.2 percent. Chevron reported first quarter earnings of $1.84 billion or $0.92 per share compared to $5.17 billion or $2.48 per share in the year-ago quarter. Analysts had been expecting the company to report earnings of $0.81 per share.
Meanwhile, MetLife (MET) saw considerable weakness on the day after reporting a first quarter loss of $574 million or $0.71 per share compared with a profit of $615 million or $0.84 per share in the same quarter last year. Shares of MetLife closed down 7.7 percent.
The major averages showed a notable upward move going into the close, ending the day in positive territory. The Dow closed up 44.29 points or 0.5 percent at 8,212.41, the NASDAQ closed up 1.90 points or 0.1 percent at 1,719.20 and the S&P 500 closed up 4.71 points or 0.5 percent at 877.52. With the gains on Friday, the major averages all closed higher for the week, with the NASDAQ setting a nearly six-month closing high. While the NASDAQ rose 1.5 percent for the week, the Dow and the S&P 500 posted weekly gains of 1.7 percent and 1.3 percent, respectively.
In economic news, Indonesia's consumer price annual inflation eased to 7.31 percent in April from 7.92 percent recorded in March, the statistical office said Friday. Economists had expected the rate to ease to 7.6 percent. On a monthly basis, the consumer price index fell 0.31 percent in April after rising 0.22 percent in April.
Also, the statistical office said exports fell 28.87 percent year-on-year to US$ 8.54 billion. Given the fall in exports and easing inflation, most economists expect the Bank Indonesia to cut the key rate by 25 basis points to 7.25 percent on Tuesday, when its monetary policy committee meets.
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