(RTTNews) - The three-day winning streak for the Indonesian stock market is now history, after it added more than 100 points or 8 percent in that span. The Jakarta Composite Index maintained support above 1,400 points, and now investors are optimistic that the market will move back to the upside again on Wednesday - possibly challenging the 1,450-point plateau.

The global forecast calls for modest gains for the Asian markets, thanks to continued strength among the commodities and optimism over the coming administration of U.S. President-elect Barack Obama, which is now less than two weeks away. The European markets were broadly higher, and the U.S. markets saw more modest gains - and the Asian bourses are predicted to move to the upside as well.

The JCI finished barely lower on Tuesday, as profit taking among the commodities was enough to nudge the market into the red.

For the day, the index eased 1.8 points or 0.13 percent to close at 1,435.54 after trading between 1,430.10 and 1,462.63. Among the decliners, Bumi Resources was 9.6 percent lower and Telkom Indonesia slid 1.4 percent.

The lead from Wall Street is cautiously optimistic as stocks saw some volatility over the course of the session before ending Tuesday’s trading firmly in positive territory, although well off their highs. The choppy trading came as investors responded to a mixed bag of economic news and remarks by Obama.

On the economic front, reports on service sector activity, factory orders, and pending home sales painted a mixed picture of the economy. The Institute for Supply Management said that its index of activity in the service sector rose to 40.6 in December from a record low of 37.3 in November, although a reading below 50 still indicates a contraction in the sector. Economists had expected the index to edge down to 37.0.

At the same time, the government issued its report on November factory orders, showing a decline of 4.6 percent following a revised 6.0 percent decrease in October. Factory orders were expected to decline 2.6 percent in November. Similarly, weakness was also seen in the pending home sales report that was released by the National Association of Realtors. Pending home sales fell by 4.0 percent to a record low in November, while analysts had expected pending sales to fall by a more modest 1.0 percent.

In other news, President-elect Barack Obama said Tuesday that he expects to inherit a $1 trillion federal deficit, a burden that will likely extend into the next few years. Subsequently, Obama said he and his team want to instill a “sense of responsibility” about future budget choices. That “sense of responsibility” includes a ban on all earmarks from the economic stimulus package he hopes to sign soon after he takes office on January 20th. The president-elect met with both Democrat and Republican lawmakers Monday to discuss his proposed package, aiming at a swift passage following his inauguration.

Meanwhile, the forecast from members of the Federal Open Market Committee deteriorated significantly in the period between their October and December meetings, the minutes from the FOMC’s December meeting revealed. The policy-making arm of the Federal Reserve is expecting economic weakness to extend throughout 2009, a bleak outlook that prompted them to slash the federal funds rate to record low levels.

By the close of trading, the major averages were well off their best levels of the day, but they held onto strong gains. The Dow closed up 62.21 points or 0.7 percent at 9,015.10, the Nasdaq closed up 24.35 points or 1.5 percent at 1,652.38 and the S&P 500 closed up 7.25 points or 0.8 percent at 934.70.

In economic news, the Indonesian central bank is on Wednesday scheduled to announce its monetary policy decision for interest rates. Analysts are split on the decision, with some forecasting a cut of 25 basis points from the current 9.25 percent to 9 percent. Others are expecting a deeper cut of 50 basis points to 8.75 percent.

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