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🇮🇩 Indonesia /Economy & Trade

Indonesia's IHSG Strengthens on Global Optimism, Awaiting Fed Signals

From Republika · () Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Indonesia's IHSG stock index opened higher on Monday, driven by global market optimism over the US Federal Reserve's dovish stance.
  • Domestic sentiment is weighed down by the first trade deficit since April 2020, contracting manufacturing activity, and a Fitch Ratings warning on declining foreign exchange reserves.
  • Global markets are influenced by weaker-than-expected US employment data, which strengthens the possibility of Fed monetary easing, and ongoing US-EU trade negotiations.

Indonesia's Composite Stock Price Index (IHSG) began Monday's trading session with an upward trend, fueled by global market optimism regarding the US Federal Reserve's dovish stance. The IHSG opened 0.30 percent higher at 5,893.28, with the LQ45 index of leading stocks also seeing a 0.22 percent increase.

Domestic sentiment is still overshadowed by the first trade deficit since April 2020, a contraction in manufacturing activity, and a warning from Fitch Ratings regarding a decline in foreign exchange reserves.

— Liza Camelia SuryanataHead of Research at Kiwoom Sekuritas explaining domestic economic concerns.

However, domestic sentiment faces headwinds. "Domestic sentiment is still overshadowed by the first trade deficit since April 2020, a contraction in manufacturing activity, and a warning from Fitch Ratings regarding a decline in foreign exchange reserves," stated Liza Camelia Suryanata, Head of Research at Kiwoom Sekuritas. She noted that global market sentiment has turned positive following US employment data that fell short of expectations, thereby increasing the likelihood of the Fed implementing looser monetary policies.

"Market participants are beginning to reduce expectations of interest rate hikes and increase their positions in riskier assets," Liza explained. The market's short-term direction will hinge on upcoming economic data releases, including the US ISM Services PMI, the Federal Open Market Committee (FOMC) meeting minutes, and China's inflation data. Additionally, market attention is focused on the US-EU trade negotiations and the potential impact of tariff policies on the global manufacturing sector.

Market participants are beginning to reduce expectations of interest rate hikes and increase their positions in riskier assets.

— Liza Camelia SuryanataExplaining the impact of US employment data on global market sentiment.

Meanwhile, Middle East tensions have eased following progress in US-Iran peace talks, leading to a recovery in shipping activity through the Strait of Hormuz and Saudi Arabian oil exports returning to approximately 90 percent of pre-conflict levels. "These developments are helping to alleviate concerns about global energy supply disruptions," Liza added. Domestically, the Directorate General of Taxes is strengthening its oversight of the digital economy by using transaction data from major e-commerce platforms to monitor online merchants' turnover and expand the tax base.

These developments are helping to alleviate concerns about global energy supply disruptions.

— Liza Camelia SuryanataCommenting on the easing of Middle East tensions and its effect on energy markets.
DistantNews Editorial

Originally published by Republika in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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