Global Pressures Weigh on IHSG Despite Improving Domestic Indicators
00:00
00:00
- Indonesia’s IHSG is expected to remain volatile due to rising oil prices, high global interest rates, and geopolitical tensions despite improving domestic indicators.
- External pressures, including inflation risks and reduced expectations for rate cuts, are weighing on investor sentiment toward emerging markets like Indonesia.
- While domestic economic signals show recovery, foreign outflows, weakening trade surplus, and global uncertainties continue to challenge market stability.
Jakarta – Indonesia’s benchmark stock index is expected to trade with heightened volatility, pressured by rising global oil prices and persistently high interest rates, despite signs of improving domestic economic activity.
The Jakarta Composite Index (IHSG) opened slightly higher on Wednesday, gaining 11.67 points or 0.19 percent to 6,207.10. Meanwhile, the LQ45 index, which tracks the most liquid blue-chip stocks, edged down 0.04 percent to 619.02.
“Overall, Indonesia’s short-term market outlook is improving, but remains vulnerable to external pressures such as elevated oil prices, sustained high global interest rates, and a weakening trade surplus,” analysts at Lotus Andalan Sekuritas said in a research note.
Global sentiment remains mixed. U.S. equities reached fresh record highs on June 2, driven by optimism surrounding artificial intelligence (AI) developments and semiconductor stocks. The rally has reinforced investor confidence that AI-led investment growth still has a long runway.
However, concerns are emerging over the concentration of gains in a handful of large-cap technology stocks, raising questions about the sustainability of the rally.
Geopolitical tensions are also adding to market uncertainty. Frictions between the United States and Iran have intensified, with Tehran threatening to block the Strait of Hormuz — a critical global oil supply route. The development has pushed oil prices closer to $100 per barrel, raising fears of renewed global inflationary pressure.
At the same time, strong U.S. labor market data and rising inflation in the Eurozone have reduced expectations for imminent interest rate cuts by major central banks.
“The combination of high energy prices, persistent inflation, and elevated interest rates could dampen investor appetite for emerging market assets, including Indonesia,” the Lotus research team noted.
On the domestic front, Indonesia’s manufacturing Purchasing Managers’ Index (PMI) returned to expansion territory in May 2026, signaling a rebound in economic activity after a contraction in the previous month.
Still, several risks remain. Foreign investors recorded a net sell of Rp1.39 trillion, indicating that global investor confidence in the domestic market has yet to fully recover.
Indonesia’s trade surplus also narrowed sharply to just $90 million, driven by a surge in imports. Meanwhile, inflation rose to 3.08 percent year-on-year in May 2026, largely due to higher transportation and energy costs.
In the banking sector, elevated levels of undisbursed loans suggest that liquidity remains ample, although demand for productive credit has yet to fully rebound.
Global markets showed a mixed but generally positive performance. European stocks closed higher on Tuesday, with the Euro Stoxx 50 rising 1.17 percent, the FTSE 100 gaining 0.33 percent, Germany’s DAX advancing 0.48 percent, and France’s CAC 40 climbing 0.77 percent.
Wall Street also ended in positive territory, with the Dow Jones Industrial Average up 0.45 percent, the S&P 500 gaining 0.13 percent, and the Nasdaq Composite rising 0.48 percent.
In Asia, markets were mixed in early trading. Japan’s Nikkei surged 2.56 percent, Shanghai edged up 0.19 percent, Singapore’s Straits Times gained 0.83 percent, while Hong Kong’s Hang Seng fell 1.52 percent.
Indonesianpost.com | Antara
