IHSG Strengthens as Investors Monitor Global Interest Rate Direction
Jakarta (ANTARA) - The Jakarta Composite Index (IHSG) on the Indonesia Stock Exchange (BEI) moved higher on Thursday morning as investors continued to scrutinise the direction of global benchmark interest rates.
The IHSG opened up 14.72 points, or 0.26 percent, at 5,709.84. Meanwhile, the LQ45 index of 45 leading stocks rose 2.57 points, or 0.46 percent, to 559.32.
“Based on technical analysis, we see the IHSG has the potential for limited gains with support and resistance at 5,320 and 5,735. The potential for a correction remains, so stay cautious,” said Maximilianus Nico Demus, Associate Director of Research and Investment at Pilarmas Investindo Sekuritas, in his research note in Jakarta on Thursday.
From the global front, at a European Central Bank (ECB) banking forum, Federal Reserve Chair Kevin Warsh stated that inflation risks have decreased in recent weeks, with the inflation target remaining at 2 percent. Warsh noted that inflation expectations during the first four weeks had fallen again, aligning with the Fed’s focus on providing stability on the inflation side.
As the Fed did not raise interest rates, bond yields did not increase again and even tended to decline. The Fed views last year’s inflation increase as merely temporary. “Currently, energy and petrol prices continue to fall due to positive news regarding the agreement between the United States (US) and Iran,” Nico said.
Furthermore, Warsh reminded that the Fed remains independent, even though US President Donald Trump consistently desires lower interest rates. Warsh said the Fed would have a new direction but declined to specify it. “The latest projections for interest rates show 18 officials project a rate hike this year,” Nico stated.
Domestically, the Central Statistics Agency (BPS) reported that June 2026 inflation reached 0.44 percent month-to-month (mtm), 1.79 percent year-to-date (ytd), and 3.34 percent year-on-year (yoy). The rise in inflation was driven by seasonal cycles, increases in raw material costs, and higher fuel prices.
Additionally, BPS reported that Indonesia’s trade balance recorded a deficit of 1.61 billion US dollars in May 2026, marking the first deficit in six years, as imports reached 24.81 billion US dollars, surpassing exports of 23.20 billion US dollars. “Pressure on Indonesia’s external sector is beginning to increase, particularly due to slowing exports amid weakening global demand and declining prices of several key commodities,” Nico said.
On the other hand, the rise in imports reflects still-strong domestic demand for raw materials, capital goods, and energy. If the increase in imports is dominated by raw materials and capital goods, this condition can still be viewed positively as it supports production and investment activities.
Nico mentioned that if the export weakening trend continues in the coming months, the trade surplus that has been supporting rupiah exchange rate stability and foreign exchange reserves could potentially shrink. “However, because cumulatively from January to May 2026 the trade balance still recorded a surplus, the impact on Indonesia’s economic fundamentals is expected to remain limited,” Nico said.
On Wednesday (01/06), European markets moved variably, with the Euro Stoxx 50 weakening 0.70 percent, the UK’s FTSE 100 index weakening 0.18 percent, Germany’s DAX index strengthening 0.18 percent, and France’s CAC 40 index weakening 0.79 percent.
US Wall Street markets were also mixed on Wednesday (01/06), with the Dow Jones Industrial Average weakening 0.03 percent, the S&P 500 index weakening 0.2 percent, and the Nasdaq Composite index weakening 1.54 percent.
Regional Asian stock markets this morning saw the Nikkei index strengthen 1.55 percent to 19,733.00, the Shanghai index weaken 0.83 percent to 4,078.00, the Hang Seng index weaken 1.15 percent to 23,143.00, and the Strait Times index strengthen 0.49 percent to 5,186.00.