Beware! Ceasefire at Risk, Fed Sends Strong Signals on Interest Rates

Indonesia’s financial markets are expected to continue their positive trend today. The Composite Stock Price Index (IHSG) soared 3.39% during Wednesday’s trading (8/4/2026). The IHSG closed at 7,207.16, up 236.13 points from the previous session. Of the stocks traded, 566 rose, 134 fell, and 114 remained unchanged, with transaction value reaching Rp12.99 trillion from 26.86 billion shares in 1.44 million transactions. Foreign investors recorded a net buy of Rp632.9 billion in yesterday’s trading. Bank Indonesia (BI) has also reaffirmed its current focus on maintaining rupiah stability amid persistently high global uncertainties. BI Senior Deputy Governor Destry Damayanti stated that the central bank will optimise all monetary operation instruments to safeguard exchange rate stability. In the US stock market, Wall Street surged on Wednesday after Trump suspended attacks on Iran for two weeks, temporarily halting a five-week conflict that had closed vital waterways for global energy supplies. The Dow Jones Industrial Average jumped 1,325.46 points, or 2.85%, to 47,909.92. This marked the best daily performance since April 2025, when Trump first softened his initial tariff policies. The S&P 500 rose 2.51% to 6,782.81, while the Nasdaq Composite soared 2.80% to 22,635.00. West Texas Intermediate crude oil prices plunged more than 16% and closed at US$94.41 per barrel, the largest daily drop since April 2020. Meanwhile, the global benchmark Brent crude for June delivery fell around 13% to US$94.75. “I agree to suspend bombing and attacks on Iran for two weeks,” Trump wrote on Truth Social. “We have received Iran’s 10-point proposal, and we believe this can serve as a viable basis for negotiations.” Trump stated that the “two-way” ceasefire depends on Iran’s willingness to reopen the Strait of Hormuz. Iran’s Supreme National Security Council has approved reopening the route for two weeks provided all attacks cease, according to a statement from Iran’s Foreign Minister. The statement also mentioned that ship traffic must be coordinated with Iran’s armed forces. Israel has also approved the ceasefire, according to media reports. “It’s no surprise there’s a pause in the Iran conflict. The market is now much savvier at reading Trump’s next moves,” said Jay Woods, chief market strategist at Freedom Capital Markets, quoted from CNBC International. “The concern now is whether this ‘two-week’ period, which has happened often before, will truly yield a solution,” he added. Stocks received further boost after Trump stated that the US would work with Iran to remove nuclear materials from the country, as well as discuss easing tariffs and sanctions. Nevertheless, uncertainty still looms over access through the Strait of Hormuz. On Wednesday, Iran’s state news agency Fars reported that oil tanker traffic in the strait has halted following Israel’s attack on Lebanon. Iran’s parliamentary speaker, Mohammad Bagher Ghalibaf, also stated that the US has violated the two-week ceasefire agreement, highlighting growing distrust between the two countries. The market rally was led by stocks that had been most pressured since the conflict began. Semiconductor producers vulnerable to supply chain disruptions rose sharply, with the VanEck Semiconductor ETF surging more than 5%. Broadcom shares rose nearly 5%, while Micron Technology soared more than 7%. International markets more reliant on energy imports outperformed the US, with the iShares MSCI Emerging Markets ETF up more than 5%. South Korean shares jumped more than 10%. Small-cap stocks, more sensitive to economic cycles, also rose nearly 3%. On the other hand, energy stocks that had surged since the conflict began weakened. Exxon Mobil and Chevron shares each fell more than 4%. This rally adds to optimism that stock markets have finally found a bottom after last month’s sell-off, though many believe volatility will not subside given the market’s sensitivity to geopolitical developments. Indonesia’s financial markets today are expected to continue the strengthening trend despite being overshadowed by negative sentiment. Developments in the war not meeting expectations, as well as FOMC minutes showing a hawkish tone, could pressure stocks and the rupiah. Ceasefire in Doubt Iran’s parliamentary speaker, Mohammad Bagher Ghalibaf, on Wednesday accused the United States of violating the two-week ceasefire agreement. “The deep distrust we have towards the United States stems from repeated violations of various forms of commitments—a pattern that unfortunately is repeating itself,” Ghalibaf said in a statement posted on social media, quoted from CNBC International. Ghalibaf mentioned that three points in Iran’s 10-point ceasefire proposal have been violated. These violations include Israel’s ongoing attacks on Lebanon, the entry of drones into Iranian airspace, and the rejection of the Islamic Republic’s right to enrich uranium. “In a situation like this, a bilateral ceasefire or negotiations become illogical,” he said. Meanwhile, President Donald Trump stated on Tuesday that Iran’s proposal provides a workable basis for negotiations. Ghalibaf’s statement came less than a day after Trump said he agreed to halt attacks for two weeks in exchange for Iran allowing ships to pass through the Strait of Hormuz during that period. Tensions have escalated between the US and Iran’s interpretations of the ceasefire since it was announced on Tuesday evening, particularly regarding the strait. Trump stated that the ceasefire depen