IHSG Investors Demand an End to Market 'Sacrifice'

Wall Street markets were closed on Monday for Memorial Day, while futures markets remained open and showed a surge in stocks. US stock futures rose on Monday evening as oil prices fell and hopes grew that the US-Iran conflict could soon ease. The Dow Jones futures climbed 0.9%, S&P 500 futures rose 0.9%, and Nasdaq-100 futures surged 1.2%. US President Donald Trump stated negotiations with Iran were progressing well, though the US still left open the possibility of offensive action if talks failed. His comments caused US crude oil prices to drop around 6%. European stocks hit their highest levels since 2 March on Monday as hopes for a US-Iran deal grew over the weekend. The pan-European Stoxx 600 rose over 0.8%, with France’s CAC 40 and Germany’s DAX surging 1.8% and 1.6% respectively. Trading was quieter as the UK markets were closed for a public holiday. European gains followed Asian markets, with Japan’s Nikkei 225 breaking 65,000 for the first time. Investor sentiment improved on reports that the Strait of Hormuz could reopen soon, pressuring oil prices. US President Donald Trump said negotiations with Iran were ‘orderly and constructive’ and urged his team not to rush a deal. Following his remarks, oil prices fell over 5%, easing market concerns. Eurozone bond yields also fell as investors reduced expectations of central bank rate hikes. German two-year government bond yields dropped to their lowest since 8 May. On the corporate front, Delivery Hero shares surged over 10% after reports that Uber was considering a higher takeover bid for the company. Indonesian financial markets are expected to remain cautious today due to the extended Idul Adha holiday. Markets will be closed on Wednesday and Thursday, reopening on Friday. With a shortened trading week, investors must monitor both domestic and international sentiment, particularly developments in the ongoing conflict. 1. US-Iran Deal Nears as Oil Prices Plunge Negotiations between the US and Iran in Doha to end a three-month conflict have shown progress, including discussions on reopening the Strait of Hormuz and Iran’s nuclear issue. However, Washington and Tehran remain unsure if a deal can be reached soon. Market optimism caused oil prices to plummet, with Brent crude falling 7% to $96.14 per barrel and WTI dropping over 6% to $90.30 per barrel. US President Donald Trump said talks with Iran were going well but warned the US could resume attacks if negotiations failed. US Secretary of State Marco Rubio stressed diplomacy remains the top priority. Meanwhile, Israel continued its attacks on Hezbollah in Lebanon, while Iran claimed to have shot down a stealth drone in the Persian Gulf. Regional tensions had previously triggered oil price spikes and disruptions in shipping through the Strait of Hormuz. 2. US PCE Inflation Data Although Indonesian financial markets are closed on Thursday, investors must monitor international sentiment, including from the US. The US will release April’s personal consumption expenditures (PCE) inflation data on Thursday (28 May 2026), which is a key guide for the Federal Reserve’s interest rate policy. The US PCE index rose 3.5% year-on-year in March 2026, the highest since May 2023 and in line with market expectations. Historically, US PCE inflation averaged 3.28% from 1960 to 2026, with a record high of 11.6% in March 1980 and a low of -1.47% in July 2009. Month-on-month, the US PCE index rose 0.7% in March 2026, in line with market forecasts and higher than February’s 0.4% increase. This marked the highest monthly rise since June 2022. The rise was primarily driven by a 1.4% surge in goods prices, fueled by a 20.9% jump in gasoline and other energy costs. Service sector inflation rose to 0.3% from 0.2%, mainly due to higher transportation costs. Core PCE, which excludes food and energy, rose 0.3% after a 0.4% increase in February. Year-on-year, headline PCE reached 3.5%, while core PCE climbed to 3.2%. 3. Has IHSG Recovered? The IHSG has been on an upward trend, rising for two consecutive days. This is positive news as it had previously fallen for eight days straight—a streak last seen in August 2005, nearly 21 years ago. The IHSG has fallen 10.8% this month and is likely to end May with a decline, marking five consecutive months of losses. This year, it has not recorded a single monthly gain. The IHSG has closed in the red more often than green. In 2026 trading, it fell 50 times and rose 40 times. The IHSG has plunged 28.2% in 2026, making it the worst-performing stock index globally. The IHSG’s poor performance doesn’t stop there: it has dropped 32% from its peak on 19 January 2026 (9,133). This decline occurred in less than five months, driven by negative sentiment including regional conflicts, MSCI rebalancing, credit rating downgrades, and fiscal concerns. The IHSG even experienced a trading halt on 28-29 January 2026 after several exchange and Financial Services Authority (OJK) officials resigned. The IHSG’s collapse has significantly impacted investor gains and losses, with effects extending to the broader economy.