News, Articles & Reviews

Jakarta (ANTARA News) - Indonesian shares were higher in early trade on Friday led by blue chips following strong first-quarter earnings and another cut in U.S. interest rates.

"So far, I think people are buying because of earnings and the Fed rate cut. I am just afraid the rally could be short-lived," said Endang Purnama, a dealer with Panin Securities.

The Federal Reserve trimmed interest rates by 25 basis points on Wednesday, as expected.

It was the first time that investors in Indonesian equities reacted to the U.S. rate cut with local markets closed on Thursday for a public holiday.

The rate reduction which brought the federal funds rate to 2.0 percent further widened the gap with Bank Indonesia's benchmark rate of 8.0 percent.

Purnama said the rally may lose steam if the government announces a higher than expected April inflation number this afternoon because that raises the chances of the Indonesian central bank lifting interest rates in coming months.

The bank last hiked interest rate in to its peak of 12.75 percent.

Ten economists surveyed by Thomson Financial are expecting the consumer price index to show a rise of 8.5 percent to 9.0 percent on the year, and to be up 0.2 percent to 0.5 percent from the previous month.

In March, inflation rose 8.17 percent from a year earlier and was up 0.95 percent versus February.

At 9:45 a.m. (0245 GMT) the Jakarta composite index was up 33.95 points or 1.5 percent at 2,338.47.

Key advancers include diversified conglomerate Astra International, which rose 4.8 percent to 20,950 rupiah after reporting forecast-beating earnings for the first quarter.

Some large caps banks also extended recent gains after reporting stronger-than-expected earnings. The country's biggest bank, Bank Mandiri, gained 2.6 percent to 2,950 rupiha and Bank Rakyat Indonesia rose 6.7 percent to 6,350 rupiah.

Source