IHSG Strengthens on Optimism Over Dovish Global Central Bank Stance

The Indonesian Composite Index (IHSG) opened higher on Monday, driven by optimism that the US Federal Reserve and other global central banks will adopt a more dovish monetary policy stance. The IHSG strengthened by 30.95 points, or 0.48 percent, to 6,440.60, while the LQ45 index of top stocks rose 2.16 points, or 0.34 percent, to 642.45.

The positive sentiment primarily stemmed from weaker-than-expected US labour data. The NonFarm Payrolls (NFP) report showed an unexpected reduction of 23,000 jobs in July 2026, following a downward revision of the previous month’s figures. According to LSEG data, this reduced the probability of a Fed rate hike in September 2026 to 43.9 percent, down from 57 percent before the data release. The likelihood of the Fed maintaining its current rate at the September meeting rose to 60.4 percent from 43.2 percent.

Market participants are also monitoring geopolitical developments, including negotiations between the US, Iran, and Middle Eastern nations regarding access to the Strait of Hormuz. From the US, investors await the release of economic data such as the Consumer Price Index (CPI), Producer Price Index (PPI), retail sales, and the Michigan Consumer Sentiment Index.

Domestically, the MSCI index rebalancing is scheduled for 12 August 2026, with changes effective from 31 August 2026, though MSCI has maintained a freeze on adding new Indonesian stocks. Investors are also anticipating the release of the Consumer Confidence Index, retail sales data, and motorcycle and car sales figures throughout the week.

Asian markets mirrored the positive sentiment, with the Nikkei surging 2.01 percent, the Shanghai Composite gaining 0.41 percent, and the Hang Seng Index rising 0.50 percent.