Jakarta Stocks May See Continued Selling

 

 The Indonesian stock market on Friday wrote a finish to the five-day winning streak in which it had collected more than 50 points or 1.6 percent en route to a record closing high. The Jakarta Composite Index fell back below the 2,880-point plateau, and now analysts are expecting to see those losses accelerate when the market opens for business on Monday.

The global forecast for the Asian markets is broadly negative, with financials leading the way lower after the U.S. Securities and Exchange Commission on Friday charged Goldman Sachs with fraud. Commodity prices also remain caught up in that tailspin, as do properties, airlines and steel stocks. The European and U.S. markets finished sharply lower, and the Asian markets are forecast to respond in similar fashion.

The JCI finished modestly lower on Friday as investors locked in gains from the record-setting rally, led to the downside by weakness from the financial sector.

For the day, the index lost 21.86 points or 0.75 percent to finish at 2,878.67 after trading between 2,860.93 and 2,903.28. Volume was 4.89 billion shares worth 3.9 trillion rupiah. There were 120 decliners and 65 gainers.

Among the decliners, Bank Mandiri shed 2.9 percent, while Bank Negara Indonesia lost 2.1 percent, Bumi Resources fell 1 percent and Elnusa plunged 6.8 percent.

The lead from Wall Street calls for heavy damage as stocks saw substantial weakness on Friday, after the SEC filed fraud charges against Goldman Sachs, whipping up a storm of uncertainty in the markets. The major averages all closed sharply lower on the day, snapping a six-session winning streak.

Late in the morning, the SEC charged Goldman Sachs and one of its vice presidents with fraud, sending markets into a tailspin. Goldman stands accused of creating a collateralized debt obligation designed to fail while also shorting the instrument, resulting in a substantial gain for the firm. Shares of Goldman Sachs sank by 12.8 percent on the news and closed at their lowest price in just over six weeks.

Ahead of the news, the markets were focused on earnings, as rising costs at Google (GOOG) and disappointing guidance from Advanced Micro Devices (AMD) prompted initial weakness.

On the economic front, Reuters and the University of Michigan released a report showing a substantial deterioration in consumer sentiment in the month of April, further contributing to early selling pressure.

Meanwhile, the Commerce Department said that new residential construction saw a modest increase in the month of March, while February's data saw a substantial upward revision.

The major averages all saw choppy movement in late-session dealing, remaining well below the unchanged line. The Dow fell by 125.91 points or 1.1 percent to 11,018.66, the NASDAQ slid by 34.43 points or 1.4 percent to 2,481.26 and the S&P 500 tumbled by 19.54 points or 1.6 percent to 1,192.13.

Despite the steep losses on the day, the Dow and the NASDAQ managed to close higher for the seventh straight week. The Dow edged up by 0.2 percent for the week, while the NASDAQ jumped 1.1 percent. On the other hand, the S&P 500 posted a weekly loss of 0.2 percent.