The Indonesian stock market has finished higher now in six consecutive sessions, gathering nearly 190 points or 12 percent on its way to a fresh six-month high. The Jakarta Composite Index broke through resistance at 1,660 points, but now analysts are expecting a sharp pullback at the opening of trade on Tuesday as the market follows the rest of the region into negative territory.
The global forecast for the Asian markets is sharply negative after disturbing earnings news from Bank of America, which is expected to put financial stocks under heavy pressure throughout the region. The price of crude oil also plummeted overnight, which could put the heat on many of the resource stocks. The European and U.S. markets all suffered heavy losses across the board, and the Asian bourses are expecting a similar fate.
The JCI finished sharply higher again on Monday, fueled by gains among the financials. For the day, the index surged 27.05 points or 1.65 percent to close at the daily high of 1,681.84 after dipping as low as 1,618.88. Volume was 20.5 billion shares worth 5.3 trillion rupiah.
Among the actives, Bank Mandiri gained 5.05 percent, while Bank Negara Indonesia was up 3.9 percent, Bank Niaga added 8.2 percent, Bank Central Asia fell 1.4 percent, Bakrie & Brothers soared 27.63 percent and Bumi Resources rose 24.37 percent.
The lead from Wall Street is broadly pessimistic as stocks moved sharply lower over the course of the trading day on Monday, with the major averages giving back some ground after closing higher for six straight weeks. A negative reaction to the latest earnings news inspired traders to do some profit taking.
Bank of America released its first-quarter results before the market open. While the company posted a better earnings figure than analysts had expected, a significant increase in loan loss protection made investors wary of holding onto the stock.
On the economic front, the Conference Board said its leading economic index fell 0.3 percent in March following a revised 0.2 percent decrease in February. The agency noted that the index has not risen in the past nine months.
In merger news, Sun Microsystems (JAVA) agreed to be acquired by Oracle (ORCL) for $9.50 per share in cash. The offer represents a 42 percent premium to Sun's closing price on Friday. Oracle expects the acquisition to be accretive to its earnings by at least $0.15 per share on a non-GAAP basis in the first full year after closing.
Additionally, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) showed strong upward moves after PepsiCo (PEP) offered to acquire both bottlers for about $6 billion.
Also, with the price of crude oil showing a steep decline, closing down $4.45 at $45.88 a barrel, the oil services sector saw substantial weakness. Reflecting the weakness in the sector, the Philadelphia Oil Services Index closed down 6.7 percent.
The major averages saw some further downside in the latter part of the trading day, ending the session near their worst levels of the day. The Dow closed down 289.60 points or 3.6 percent at 7,841.73, the NASDAQ closed down 64.86 points or 3.9 at 1,608.21 and the S&P 500 closed down 37.21 points or 4.3 percent at 832.39.
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