IHSG strengthens as US inflation data dampens Fed tightening expectations
The Indonesia Stock Exchange’s Composite Index (IHSG) closed higher on Wednesday afternoon following the release of United States inflation data that tempered market expectations of monetary tightening by the Federal Reserve.
The IHSG closed up 2.45 points, or 0.04 per cent, at 6,041.97. Meanwhile, the LQ45 index of 45 leading shares rose 1.01 points, or 0.17 per cent, to 599.90.
“The IHSG and regional Asian markets moved higher as the release of US inflation data dampened expectations of an increase in the Fed’s benchmark interest rate,” said Maximilianus Nico Demus, also known as Nico, Associate Director of Research and Investment at Pilarmas Investindo Sekuritas, in his review in Jakarta on Wednesday.
From abroad, US inflation data coming in lower than forecast reduced expectations of monetary tightening by the Federal Reserve in the near term.
The annual US inflation rate fell to 3.5 per cent in June from 4.2 per cent in May 2026, below the forecast of 3.8 per cent.
Meanwhile, Fed Chair Kevin Warsh reaffirmed the central bank’s commitment to restoring price stability during congressional testimony, but gave no signal of more aggressive policy.
Markets continue to price in roughly a 50 per cent chance of a Fed rate hike in September 2026, as renewed tensions between the United States and Iran have lifted oil prices and kept inflationary pressure in focus.
Domestically, the government affirmed that it will not raise tax rates as part of efforts to increase state revenue.
The policy of not raising tax rates is a positive sentiment for the business world, as it reduces the risk of a heavier tax burden and preserves companies’ competitiveness.
Moreover, the focus on broadening the tax base through improved compliance and digitalisation is considered more supportive of economic growth than raising rates.
Opening higher, the IHSG remained in positive territory until the close of the first trading session. In the second session, the index stayed in the green until the close of trade.
Based on the IDX-IC sectoral index, six sectors advanced, led by the basic materials sector, which rose 0.67 per cent, followed by the property sector and the transportation and logistics sector, up 0.64 per cent and 0.32 per cent respectively.
Five sectors weakened, with the healthcare sector falling the deepest at 0.60 per cent, followed by the industrial sector and the primary consumer goods sector, down 0.38 per cent and 0.34 per cent respectively.
The shares with the largest price gains were INAI, RANS, PRDL, AGAR and GDST, while those with the largest declines were COCO, SKBM, CASA, SQMI and RUNS.
Trading frequency was recorded at 2,008,000 transactions, with 21.78 billion shares traded worth Rp11.33 trillion. A total of 348 shares rose, 286 fell and 331 were unchanged.
Regional Asian stock markets this afternoon showed the Nikkei index up 1.49 per cent to 68,775.00, the Shanghai index down 0.29 per cent to 3,955.58, the Hang Seng up 1.40 per cent to 24,681.10, the Kospi up 6.24 per cent to 7,284.41, and the Strait Times index up 1.09 per cent to 5,554.66.