Global Markets Wobble as Hawkish Fed Dashes Rate Cut Hopes
Market expectations for monetary easing in the United States have once again been postponed. The latest signal from the US central bank, The Federal Reserve, under new Chairman Kevin Warsh, indicates that a benchmark interest rate cut will not occur in the near term, placing significant pressure on global stock markets, including the Jakarta Composite Index (IHSG).
The Fed’s renewed stance pointing towards a ‘higher for longer’ interest rate policy immediately triggered caution at the start of the trading session. This macroeconomic condition has made investors tend to hold back from high-risk assets and begin adjusting their portfolios.
As of 09:20 Western Indonesia Time (WIB), the selling pressure had a direct impact on the movement of a number of issuers on the Indonesia Stock Exchange, pushing several stocks into the deepest red zone as top losers.
Based on this morning’s trading data, shares of PT Perdana Bangun Pusaka Tbk (KONI) led the decline with a sharp correction of 14.86% to a level of Rp2,980 per share. Similar pressure was also experienced by shares of PT Gihon Telekomunikasi Indonesia Tbk (GHON) and PT Danasupra Erapacific Tbk (DEFI), which plunged 11.34% and 11.03% respectively.
However, the heaviest burden on the index movement and the main focus of market participants was the fall in the blue-chip stock of state-owned enterprise PT Telkom Indonesia (Persero) Tbk (TLKM). This mega-cap stock was recorded as plummeting 7.43% to a position of Rp2,740 per share. The decline in TLKM was also accompanied by a massive transaction value, reaching Rp130.77 billion just minutes after the market opened. Other stocks such as POLI, KOTA, and NZIA were also observed to have slumped by more than 7%.
The absence of a rate cut catalyst means stock market movement is expected to continue to be overshadowed by high volatility. Investors are currently acting rationally and tend to closely monitor foreign fund flows. Selling pressure, particularly on large-capitalisation issuers, has the potential to continue restraining the domestic bourse’s upward momentum until the release of new economic data that could ease concerns over tight global liquidity.