IDX Composite weakens driven by combination of domestic and global sentiments
The Indonesia Stock Exchange (IDX) Composite moved lower on Monday, triggered by a combination of domestic and global sentiments. The IDX Composite opened lower by 108.46 points or 1.94% to 5,486.31, and continued to decline by 222.29 points or 3.99% to 5,371.78 as of 09:15 WIB.
Kiwoom Research continues to advise a ‘wait and see’ approach before taking new long positions or averaging down, stated Liza Camelia Suryanata, Head of Research at Kiwoom Sekuritas, in her analysis in Jakarta on Monday. Internationally, the primary market theme is a shift in focus from hopes of interest rate cuts towards the risk of additional rate hikes by the US Federal Reserve. According to CME FedWatch, the market is now fully pricing in one 25 bps rate hike before the end of the year, with even the possibility of further increases being considered.
US Nonfarm Payrolls for May 2026 increased by 172,000 jobs, far exceeding the expectation of 85,000, while the unemployment rate remained at 4.3%. Strong economic data has become bad news for the stock market as it reinforces the belief that inflation may persist longer, potentially leading Fed Chairman Kevin Warsh to adopt a more hawkish stance than currently expected by the market.
This week, market participants will focus on the progress of US negotiations with Iran and Israel’s response following the Iranian missile attack on the Ramat David airbase over the weekend. Developments regarding the Strait of Hormuz will be a determining factor for oil prices, global inflation, and interest rate expectations. Additionally, attention will be directed towards the communications of Kevin Warsh and other Fed officials following the robust labour data.
On the international political stage, Chinese President Xi Jinping is scheduled to conduct a state visit to North Korea on 8-9 June 2026, at the invitation of Kim Jong Un. This marks Xi’s first visit to Pyongyang since 2019 and the first by a Chinese President in seven years. This relatively rare visit is viewed as an effort by Beijing to maintain its strategic influence over North Korea and anticipate shifts in the balance of power in East Asia.
Domestically, Bank Indonesia (BI) and the government reaffirmed during a press conference on Saturday (6/6) that the current policy focus is to increase the attractiveness of domestic financial assets through more competitive yields on instruments such as SBN and SRBI to attract foreign capital. Furthermore, they aim to maintain banking liquidity through the management of government cash at BI, with the hope of strengthening the Rupiah and mitigating pressure on the Indonesian financial market.