IHSG strengthens as US inflation data dampens Fed tightening expectations

The Jakarta Composite Index (IHSG) of the Indonesia Stock Exchange (BEI) closed higher on Wednesday afternoon, as the release of United States (US) inflation data dampened market players’ expectations of monetary policy tightening by the Federal Reserve. The IHSG closed up 2.45 points, or 0.04 percent, at 6,041.97. Meanwhile, the LQ45 index of 45 leading stocks rose 1.01 points, or 0.17 percent, to 599.90. "The IHSG and regional Asian markets moved higher, with the US inflation data release dampening expectations of a benchmark interest rate hike by the Fed," said Maximilianus Nico Demus, Associate Director of Research and Investment at Pilarmas Investindo Sekuritas, in his analysis in Jakarta on Wednesday. From abroad, lower-than-expected US inflation data encouraged markets and reduced expectations of near-term monetary policy tightening by the US central bank. The annual US inflation rate fell to 3.5 percent in June from 4.2 percent in May 2026, below the forecast of 3.8 percent. Meanwhile, Fed Chair Kevin Warsh reaffirmed the central bank’s commitment to restoring price stability during Congressional testimony but did not signal more aggressive policy moves. Markets still price in around a 50 percent chance of a Fed rate hike in September 2026, as renewed tensions between the US and Iran drive up oil prices and keep inflationary pressures in focus. Domestically, the government has affirmed it will not raise tax rates as a means of increasing state revenue. The policy of not raising tax rates is a positive sentiment for the business world, as it reduces the risk of higher tax burdens and maintains corporate competitiveness. Furthermore, the focus on expanding the tax base through improved compliance and digitalisation is seen as more supportive of economic growth than raising rates. Opening higher, the IHSG remained in positive territory through the close of the first trading session. In the second session, the IHSG continued to stay in the green zone until the end of trading. Based on the IDX-IC sectoral indices, six sectors strengthened, led by the basic materials sector which rose 0.67 percent, followed by the property sector and the transportation and logistics sector which gained 0.64 percent and 0.32 percent respectively. Five sectors weakened, with the healthcare sector falling the deepest by 0.60 percent, followed by the industrial sector and the primary consumer goods sector which fell 0.38 percent and 0.34 percent respectively. Stocks experiencing the largest price gains included INAI, RANS, PRDL, AGAR and GDST. Stocks experiencing the largest price declines were COCO, SKBM, CASA, SQMI and RUNS. Trading frequency was recorded at 2,008,000 transactions, with 21.78 billion shares traded for a total value of Rp11.33 trillion. A total of 348 stocks advanced, 286 declined, and 331 remained unchanged. Regional stock markets in the afternoon included the Nikkei index which strengthened 1.49 percent to 68,775.00, the Shanghai index which weakened 0.29 percent to 3,955.58, the Hang Seng index which strengthened 1.40 percent to 24,681.10, the Kospi index which strengthened 6.24 percent to 7,284.41, and the Strait Times index which strengthened 1.09 percent to 5,554.66.