Analysts Warn that Strait of Hormuz Closure Risk Could Extend Stock Market Pressure
Jakarta – Escalating geopolitical tensions between Iran, the United States, and Israel are weighing on global stock markets, including Indonesia, as uncertainty intensifies. Whilst current impacts are assessed as short-term, closure of the Strait of Hormuz could trigger sustained effects in the market.
Capital market analyst Elandry Pratama warned that threats to close the Strait of Hormuz—a strategic global energy distribution route—would disrupt oil and energy shipments worldwide. Consequently, global crude oil prices would climb further.
Elandry cautioned that if elevated oil prices persist for an extended period, markets would face not only sentiment pressure but also the risk of stricter monetary policy. Such conditions would prolong pressure on equity markets.
“Sustained oil price increases can trigger inflationary pressures and influence monetary policy, ultimately impacting capital flows and market stability,” Elandry said, as cited by Antara on Tuesday, 3 March 2026.
He added that escalating conflict directly influences investor sentiment and risk appetite globally. Amid such uncertainty, market participants tend to reduce exposure to risky assets.
“When tensions rise, market players tend to reduce exposure to high-risk assets such as emerging market equities, causing the Indonesian Composite Index (IHSG) to decline and volatility to increase,” Elandry stated when contacted by Antara in Jakarta on Monday.
Amid this turbulence, Elandry observed a shift in capital flows towards safe-haven assets including gold, US dollars, and government bonds. In the equity market, sector rotation is becoming visible. Initially, investors tend to move into gold-based and energy (oil and gas) stocks that benefit from rising commodity prices; however, as volatility persists, rotation may shift towards defensive sectors.
“Rotation could move towards defensive sectors such as consumer staples, healthcare, and large banks with strong fundamentals and high liquidity,” Elandry explained.
Beyond geopolitical factors, market participants are awaiting the US Federal Reserve’s benchmark interest rate decision, to be announced on 17–18 March 2026. Domestically, investors will monitor Indonesia’s central bank (Bank Indonesia) interest rate policy direction.