China to Convene Grand Meeting as War Heats Up, Stimulus to Save Indonesia?
Indonesia’s financial markets are expected to remain under heavy pressure today.
The Jakarta Composite Index (IHSG) closed down 0.91% or 73.18 points at 7,943.65 on Tuesday (3 March 2026).
In the United States, Wall Street collapsed across the board on Tuesday trading, or early Wednesday in Indonesia.
Equity markets were highly volatile on Tuesday amid concerns over a prolonged conflict between the United States and Iran unsettling investors. However, remarks from President Donald Trump appeared to ease some of the fears.
The Dow Jones Industrial Average fell 403.51 points or 0.83% to 48,501.27. The S&P 500 shed 0.94% to 6,816.63, while the Nasdaq Composite dropped 1.02% to 22,516.69.
At one point the S&P 500 slid 2.5% and the Nasdaq fell about 2.7%. The Dow, which contains 30 blue-chip stocks, even briefly plunged more than 1,200 points or around 2.6% at its intraday low.
Trump said on Tuesday afternoon that the US Navy would escort any tankers passing through the Strait of Hormuz if necessary.
“Whatever happens, the United States will ensure the free flow of ENERGY to the ENTIRE WORLD,” he wrote in a Truth Social post. “The ECONOMIC and MILITARY STRENGTH of the United States is the GREATEST IN THE WORLD - There will be further actions.”
Brent crude, the global benchmark, closed up 5.3%, extending its 6% rally from Monday. West Texas Intermediate (WTI) also rose from its highs and closed up 4.68%, after previously recording a 6% gain in the previous session. Both had risen more than 9% at one point.
The early energy price surge that day briefly pushed US Treasury yields higher amid fears that higher prices could rekindle inflation, just as investors were hoping for a Federal Reserve rate cut to spur the economy. However, yields later pared gains as oil prices cooled.
Trade worries worsened after an Iranian Revolutionary Guard commander said the Strait of Hormuz had been closed and Iran would burn vessels attempting to pass.
Trump’s warning that the conflict could last more than four weeks also dampened market sentiment.
There were signs that the conflict was deepening as it entered its fourth day:
The US Embassy in Riyadh, the Saudi capital, was attacked by a drone as Iran escalated its strikes against the country.
The US State Department ordered the evacuation of personnel from Bahrain, Iraq, and Jordan.
Tehran-backed Hezbollah attacked Tel Aviv with missiles and drones.
Concerns grew about how long Gulf states such as the United Arab Emirates could withstand a barrage of Iranian missiles and drones with their air defences.
“I think a longer-lasting mission could weigh on markets for the next few weeks,” said Jeffrey O’Connor, Head of Equity Market Structure at Liquidnet, in an interview with CNBC.
He warned that oil prices could stay elevated and investors would have to contend with movements in inflation, yields, and expectations for a Federal Reserve rate cut.
“Historically, US markets have been able to shrug off geopolitical shocks like this, but the Strait of Hormuz is currently closed,” he added.
Every sector in the S&P 500 was in the red on Tuesday.
Materials and industrials posted the biggest declines amid concerns that higher oil prices and borrowing costs could weigh on the US economy.
Some large technology shares, such as Nvidia, which led intraday gains on Monday, slipped again on Tuesday.
Memory stocks in the US were also pressured, following a sharp drop in the shares of a memory-chip producer in South Korea.
In addition, Blackstone shares fell 3.8% after the Financial Times reported that its private-credit funds recorded net outflows of US$1.7 billion in the first quarter.
There was hardly anywhere for investors to hide on Tuesday, with gold prices also retreating after a rise on Monday.
The CBOE Volatility Index, known as the fear gauge on Wall Street, surged to its highest level since November.
Indonesia’s financial markets are expected to remain under pressure, particularly from abroad. The Iran conflict and the closure of the Strait of Hormuz have heightened global uncertainty.
Domestically, Lebaran stimulus is expected to act as a positive catalyst today,
Lebaran Stimulus
Ahead of Eid al-Fitr 1447 H, the government unveiled a series of measures to maintain purchasing power and spur growth in Q1 2026.
The main instrument is the disbursement of the Tunjangan Hari Raya (THR) for civil servants and private-sector workers, accompanied by a Hari Raya Bonus (BHR) for ride-hailing driver partners, plus additional stimuli such as transport discounts and food aid.
For civil servants, THR has been disbursed in phases since 26 February 2026. The Coordinating Minister for Economic Affairs, Airlangga Hartarto, said the THR components would be paid in full (100%), including basic salary, family allowance, food allowance, and job or performance allowances as regulated.
The government allocated a Rp55 trillion budget, about 10% higher than last year, for 2.4 million central civil servants and the TNI/Polri (Rp22.2 trillion), 4.3 million regional civil servants (Rp20.2 trillion), and 3.8 million pensioners (Rp12.7 trillion). It also stressed that THR is separate from the mid-year? 13th salary to be paid separately in June 2026.
In the private sector, Labour Minister Yassierli issued Circular Letter No. M/3/HK.04.00/3/2026 obliging companies to pay THR in full with no instalments. Employees with at least one year of service are entitled to one month’s wage, while those with less than a year receive a proportional amount calculated as (length of service ÷ 12) × one month’s wage. THR must be paid at least seven days before Lebaran.