Brace Yourself: The Fed Could Turn Markets Upside Down Within Hours

Indonesia’s financial markets are expected to face numerous challenges today. The market outlook is discussed in more detail on page three of this article.

The Jakarta Composite Index (JCI) ended Tuesday’s (27 October 2026) session in negative territory, falling 1.99%, or 106.96 points, to 5,266.13 after reaching an intraday high of 5,418.14.

Selling pressure intensified in the afternoon session, particularly after 2pm Jakarta time. The JCI briefly plunged to 5,182.37 before paring some of its losses towards the close.

Trading volume reached 36.4 billion shares, with transactions worth Rp17.9 trillion. Only 100 shares rose, while 611 fell and 82 were unchanged.

Foreign investors recorded net sales of Rp668.26 billion.

By sector, infrastructure was the biggest drag on the JCI, falling 6.1%, followed by basic materials, down 3.7%, and technology, down 2.9%.

Shares weighing on the index included PT Telkom Indonesia (Persero) Tbk (TLKM), PT Amman Mineral Internasional Tbk (AMMN), PT Bayan Resources Tbk (BYAN), PT Barito Renewables Energy Tbk (BREN) and PT Barito Pacific Tbk (BRPT).

Domestically, attention is focused on the Indonesia Stock Exchange’s (IDX) planned capital-market reforms. Measures under preparation include stronger surveillance of suspicious transactions, a review of the mechanism for announcing Unusual Market Activity (UMA), and an expanded committee to assess shares with high ownership concentration (High Shareholding Concentration/HSC).

The IDX also plans to exclude HSC-category shares from the JCI calculation from 2 November 2026. The changes are intended to strengthen transparency and investor confidence in Indonesia’s capital market.

Pressure on the rupiah continued on Tuesday (27 October 2026). The currency closed weaker against the US dollar, extending the previous day’s decline.

Refinitiv data showed the rupiah closed down 0.19% at Rp18,145 per US dollar, compared with Rp18,110 at Monday’s (26 October 2026) close.

That puts it closer to its all-time weakest closing level of Rp18,170 per dollar, recorded on 8 June 2026. The rupiah is now just 25 points away from that level.

The rupiah was already in negative territory from the start of trading, weakening 0.06% to Rp18,120 per dollar. It moved in a range of Rp18,120–Rp18,155 during the day, ending 10 points stronger than its intraday low.

Meanwhile, the US dollar index (DXY), which measures the greenback against six major currencies, was up 0.16% at 102.122 at 3pm Jakarta time.

In the bond market, the yield on 10-year Indonesian government bonds (SBN) was unchanged at 7.454%.

Wall Street shares rose on Tuesday, or early Wednesday in Indonesia, as investors once again snapped up chipmakers for a second consecutive day.

Investors also weighed falling oil prices and a series of corporate earnings reports as the Federal Reserve began a two-day monetary policy meeting.

The S&P 500 rose 0.6% to close at 7,722.60. The Dow Jones Industrial Average gained 15.99 points, or 0.03%, to 52,377.57, while the Nasdaq Composite advanced 1.18% to 26,477.81.

Broadcom shares surged 4% after a banking consortium comprising Bank of America, Citi, Morgan Stanley and Blackstone announced US$63 billion in financing for the purchase of Broadcom technology to be used by Anthropic.

Other chipmakers also advanced. Micron Technology rose nearly 3%, while Advanced Micro Devices (AMD) jumped 5%.

The gains extended the previous session’s advance, when the major Wall Street indices rose, supported in part by artificial-intelligence-related shares after Anthropic filed documents to list on the Nasdaq.

If completed, Anthropic’s initial public offering (IPO) would be another major technology listing in 2026, following the historic listing of SpaceX in June.

“Markets periodically go through periods when investors worry about AI spending. But after that, technology stocks usually lead the market higher again,” said Jed Ellerbroek, a portfolio manager at Argent Capital Management, as quoted by CNBC International.

“For the last two weeks, it was as if that switch had been turned off. But in the first two days of this week, it seems to have been switched back on,” he added.

Although concerns about AI spending have weighed on markets, Ellerbroek said data-centre companies remained confident about continuing to expand their businesses.

He said one of the main potential vulnerabilities remained volatility in capital markets, which could affect companies’ access to funding.

Market sentiment on Tuesday was also supported by falling oil prices. The move followed discussions between Iran’s Supreme Leader Mojtaba Khamenei and senior national security official Mohsen Rezaei about Iran’s conditions for ending the conflict.

US West Texas Intermediate (WTI) crude futures fell 1.83% to US$99.90 a barrel. Brent crude, the global benchmark, declined 1.67% to close at US$113.88 a barrel.

JetBlue shares, meanwhile, jumped 19% despite the airline reporting a larger-than-expected loss for the third quarter of 2026. The shares rose after the company said it was optimistic about expanding its profit margin in the fourth quarter.

Shares in global delivery company United Parcel Service (UPS) also gained more than 5% after it reported third-quarter 2026 results that exceeded market expectations.

The Fed is due to announce its interest-rate decision on Wednesday afternoon local time, or early Thursday in Indonesia. The US central bank is expected to leave rates unchanged, but investors will look for clues about the possibility of another rate increase before the end of the year.

“This Fed meeting feels like one of those rare meetings that won’t produce a surprise under Warsh’s leadership. His communication strategy seems likely to make surprise-free meetings rarer. But this time, there probably won’t be a surprise, especially with the US midterm elections taking place next week,” Ellerbroek said.

He added that the Fed’s December meeting could prove a much more decisive moment for markets.

Global and Indonesian financial markets are likely to adopt a wait-and-see stance today as they await the US Federal Reserve’s interest-rate decision.

Within the next 18 hours, the world will have its answer on the Fed’s policy.

At home, several factors are set to influence share and currency movements, including student demonstrations and falling demand at government bond auctions.

The main market factors to watch today are:

1. The Fed’s October 2026 interest-rate decision

The Fed will be the biggest driver of sentiment today.

The US central bank is scheduled to announce its decision on Wednesday in the US, or at 1am on Thursday (29 October) Jakarta time, followed by a press conference at 1.30am.

The market consensus is for the Fed to keep rates at 3.75%–4.00%, after raising them by 25 basis points in September.

Although rates are expected to remain unchanged, investors will focus on Fed Chair Kevin Warsh’s comments on the inflation outlook, labour-market conditions and the possibility of further monetary tightening.

A more hawkish stance could strengthen the US dollar and weigh on risk assets, including emerging-market shares. Conversely, a signal that inflationary pressures are easing could give markets scope to reassess the outlook for US monetary policy.

For Indonesia, the Fed’s policy direction is an important factor that could affect the rupiah, foreign capital flows and the attractiveness of government securities (SBN).

2. Demand at SBN auctions falls

Investor demand at Tuesday’s (27 October 2026) government bond auction fell sharply. Total bids amounted to just Rp31.09 trillion, down 52.1% from the previous auction and the lowest since November 2024.

Despite weak demand, the weighted average yield awarded for bonds with a maturity of around 10 years climbed to 7.54%, its highest since November 2022. This was up 30 basis points in two weeks and about 147 basis points compared with the start of 2026.

The government sold only Rp20.65 trillion of bonds, below its indicative target of Rp30 trillion. The combination of weaker bids and higher yields points to financing pressures and could make new government borrowing more expensive.

The steep fall in demand for SBN is raising concerns that outflows will continue, putting further pressure on shares and the rupiah.

3. China’s industrial profits rise

China’s industrial profits rose 15.5% year on year to CNY6.03 trillion in the first nine months of 2026. This was slightly slower than the 15.7% growth recorded in January–August.

Profit growth continued to be supported by high-tech manufacturing, AI-related industries and electronic equipment. However, weak domestic demand continued to weigh on some industries.

Profits at state-owned companies rose 13.1% to CNY1.94 trillion. Joint-stock companies recorded a 20.8% increase to CNY4.67 trillion, while private companies’ profits grew 8.7% to CNY1.51 trillion.

By sector, mining remained the main driver, with profits surging 38.2%, followed by manufacturing, up 17.0%. Utilities, by contrast, recorded a 14.3% decline in profits.

Among individual industries, the strongest profit growth was in computers and communications, at 103.8%, followed by non-ferrous metal smelting and processing at 79.7%, coal mining at 57.0% and chemicals at 49.2%.

In September 2026 alone, Chinese industrial profits rose 14.4% year on year. That was a sharp acceleration from 4.2% growth in August and the strongest increase since June.

Rising industrial profits in China are welcome news for Indonesia. However, they do not necessarily mean a surge in orders for Indonesian commodities. The key question is whether industrial production and imports in China actually strengthen.

If demand for raw materials increases, Indonesian coal, nickel and mineral exporters could benefit. But if Chinese industry instead relies on expanding exports while domestic demand remains weak, Indonesian manufactured goods could face tougher price competition.

4. New US orders increase

New orders for US-made durable goods rose 1.8% month on month in September 2026, following a revised 0.1% increase in August. The result beat market expectations of a 1.5% rise.

The increase was driven by a strong recovery in transport-equipment orders, which surged 4.6% after falling 0.3% in August. The main contributor was a 28.4% jump in orders for civilian aircraft.

Elsewhere, machinery orders rose 1.2%, faster than August’s 1.0% increase. Orders for computers and electronic products were up 0.8%, compared with 0.5% the previous month.

Orders for primary metals grew 0.5%, slowing from a 1.9% rise in August. Orders for fabricated metal products also increased 0.4%, reversing a 1.4% decline the previous month.

Excluding transportation, new orders rose 0.5%, compared with 0.3% in August. Orders excluding defence surged 2.2%, up from 0.3% growth the previous month.

Non-defence capital goods orders excluding aircraft, a key indicator of business investment plans, rose 0.5%. This was slower than August’s 1.6% increase.

5. Earnings season arrives

The third-quarter 2026 corporate earnings season is under way, with several listed companies having announced their results.

PT Bank Negara Indonesia (Persero) Tbk (BBNI) and PT Bank Central Asia Tbk (BBCA) reported net profits of tens of trillions of rupiah in January–September 2026. Both banks recorded profit growth amid changing conditions in the domestic banking industry.

BNI posted net profit of Rp16.11 trillion in the first three quarters of 2026, up 6.62% year on year from approximately Rp15.11 trillion in the same period a year earlier.

BCA reported net profit of Rp45.2 trillion in January–September 2026, a 4.2% year-on-year increase from Rp43.4 trillion in January–September 2025.

The two banks’ performance offers one indication of the domestic banking industry’s trajectory in the first nine months of 2026, amid changing economic conditions and lending dynamics.

Today’s economic agenda:

• A “Coffee Morning” event, “Two Years of Prabowo: Downstreaming Advances, a Stronger Mining Industry?”, at PARLE Senayan, Central Jakarta.

• KEARNEY 100 Years of Impact: “Jakarta Towards 500: Shaping the Next Global City Together”, at The Glass House, The Ritz-Carlton Pacific Place, SCBD, South Jakarta.

• The Central Board of the Indonesian Palm Oil Farmers Association will hold the Indonesian Palm Oil Farmers’ National Meeting at Menara Peninsula Hotel, West Jakarta.

• PERIKLINDO Electric Vehicle Conference (PEVC) 2026 at Hotel Mövenpick, Central Jakarta.

• A joint outreach event on reductions in administrative penalties and the global minimum tax at the Cakti Buddhi Bhakti Auditorium, Directorate General of Taxes headquarters, South Jakarta.

• Perbanas Institute will hold its fourth CEO Lecture Series at its Jakarta campus, featuring the president director of a sharia bank.

• A press conference on the extraordinary general meeting of shareholders of the Indonesia Stock Exchange, held via Zoom.

• FOREK Hulu Migas 2026 at the Kempinski Grand Ballroom, Central Jakarta, with the Coordinating Minister for Downstreaming and Energy Transition/Minister of Energy and Mineral Resources attending.

• The Fed will announce its interest-rate policy.

Today’s corporate agenda:

• General meeting of shareholders of PT IMC Pelita Logistik Tbk.

• Cash dividend payment date for PT Diamond Citra Propertindo Tbk.

• Interim cash dividend cum date for PT Tera Data Indonusa Tbk.

• Interim cash dividend cum date for PT Puradelta Lestari Tbk.

The latest economic indicators are as follows: