Crucial Week Ahead: Key Sentiments Set to Shake Markets
Market participants must remain vigilant for turbulence in the financial markets, as several important sentiments could influence stock market movements and the rupiah exchange rate, ranging from the results of US-Iran war negotiations to China’s economic growth announcement.
Negotiations between the United States and Iran in Oman will yield results next week that could affect market sentiment. US President Donald Trump stated on Friday that the US and Iran had agreed to continue talks despite increased hostilities this week, while also declaring an end to a ceasefire reached between the two parties. Iranian Foreign Minister Abbas Araqchi arrived in Oman on Saturday to discuss arrangements for a safe passage for ships through the Strait of Hormuz, with Washington seeking to ensure the vital energy trade route remains free and safe. No attacks were reported on Friday or Saturday morning; however, a senior Iranian source told Reuters that a phone call between Iran, the US, Qatar, and Pakistan had been agreed upon, and mediators were working to arrange a meeting while Araqchi was in Oman. Oman is attempting to help mediate a resolution to the war, which has spread insecurity in the Gulf and raised prices worldwide since the US and Israel launched airstrikes on Iran on 28 February. CBS News and its British partner, the BBC, both reported that US Vice President JD Vance, Secretary of State Marco Rubio, special envoy Steve Witkoff, and Trump’s son-in-law Jared Kushner would lead negotiations with Araqchi on Saturday. Meanwhile, Iran’s Fars news agency quoted a source saying no negotiations would take place until the US withdrew from its position. The planned meeting comes amid rising tensions in the region, after three commercial tankers from Qatar and Saudi Arabia were attacked earlier in the week, prompting US strikes on Iranian sites and Iranian retaliation against US military sites in Gulf states.
The United States will announce inflation and core inflation figures on Tuesday. According to the TradingEconomics consensus, monthly core US inflation is expected to heat up again to 0.3% in June 2026, up from 0.2% in May. US inflation is closely watched due to its relation to the Federal Reserve’s interest rate policy. Fed officials were divided on the direction of interest rates during their June policy meeting, reflecting high uncertainty about the inflation and economic outlook. According to minutes from the Federal Open Market Committee meeting, some officials assessed that inflation could ease, allowing for rate cuts, while another group expected price pressures to persist, potentially necessitating further rate hikes. The meeting, the first chaired by Fed Chair Kevin Warsh, saw the central bank agree to hold the benchmark rate at 3.50%-3.75%, a level maintained throughout 2026. The minutes noted that many participants expected the appropriate rate at year-end to be at or slightly below the current range, but many others believed the rate should be higher. Officials anticipate inflation will remain elevated in the short term due to the impact of President Trump’s import tariffs, the war with Iran, and rising energy prices.
China will announce its second-quarter 2026 economic growth. The TradingEconomics consensus forecasts that growth in Indonesia’s main trading partner will slow to 4.4% year-on-year from 5% in the previous quarter. The Asian Development Bank projects China’s economic growth for 2026 will decelerate to 4.6%, in line with a downward revision for developing economies in Asia and the Pacific to 4.9% in 2026, down from 5.5% in 2025, due to the prolonged turmoil from the Middle East war. Persistent energy market disruptions from the conflict are weighing more heavily on the region than previously anticipated, according to the ADB’s latest economic projections. The growth forecast for 2027 is maintained at 5.1%, reflecting a recovery in economic activity once pressures ease. The Asian Development Outlook July 2026 estimates that a recovery from global energy market disruptions will only occur gradually, despite a framework agreement signed in June. Given that the conflict’s impact extends beyond energy to fertilisers, other commodity prices, and various supply chains, inflationary pressures are unlikely to diminish soon.