Prices of stocks traded on the Indonesia Stock Exchange (IDX) surged for the first time since Aug. 1 on Wednesday as a Wall Street rally helped restore confidence in world markets following the recent massive sell-off.

The benchmark Jakarta Composite Index jumped almost 4 percent to 3,883 points as of 9:33 a.m. local time following positive movement in other stock markets around Asia.

The United States’ Federal Reserves statement on Wednesday (Tuesday in Jakarta) about holding its key rate at a range of 0 to 0.25 percent at least until mid-2013 made investors certain of efforts to spur growth in the world’s largest economy.

The US’ Dow Jones Industrial Average soared 3.98 percent, the UK's FTSE gained 0.8 percent, Japan’s Nikkei Index increased 1.15 percent, Hong Kong’s Hang Seng surged 3.74 percent and South Korea’s KOSPI was up 2.15 percent, data at 10:15 a.m. Jakarta time shows.

Global financial markets had suffered several days of selling after being rocked by news of Standard & Poor’s downgrading the US' top-tier credit rating. Adding to this were fears of an economic slowdown there, as well as in Europe, as debt woes in the rich nations escalated, and investors wiped trillions of dollars off riskier assets and pushing up gold prices to a new record high.

Until Tuesday, the heavy sell-offs had almost completely wiped out this year’s 13 percent gain as the Jakarta Composite Index (JCI) had lost 12 percent since its peak of 4,193 on Aug. 1.

 

Source: Jakarta Post