IHSG Surges Over 4% as US-Iran Peace Deal and Fiscal Efficiency Boost Market

The Jakarta Composite Index (IHSG) strengthened at the start of the week, coinciding with the announcement of a peace agreement between the United States and Iran, signalling a de-escalation of war in the Middle East. According to IDX Mobile, trading on Monday saw the IHSG open up 2.10 percent at the 6,133 level, and by 11:08 Western Indonesian Time, it had surged more than 4 percent to reach 6,253. “This is the fourth consecutive day the IHSG has risen. I think both internal and external factors are now starting to support this,” said Brawijaya University economist Noval Adib. Noval explained that the external sentiment boosting the index was the peace deal between the US and Iran, which has calmed the Middle East conflict that had previously unsettled markets. On the domestic front, the market has responded positively to the government’s clearer stance on several priority programmes, including discourse on streamlining the free nutritious meal programme (MBG), which has bolstered confidence in fiscal management. “The government appears increasingly serious about making efficiency savings in programmes that previously seemed like ‘money burning’, such as MBG and the Red-and-White Village Cooperatives (KDMP), for whatever reason. This jumbo budget efficiency will certainly improve the fiscal condition,” he stated. According to Noval’s analysis, internal sentiment is the stronger factor driving the IHSG’s movement, as the rally began after Bank Indonesia unexpectedly raised its benchmark interest rate to 5.5 percent on 9 June 2026. “In my opinion, the internal factor has a stronger influence on this positive sentiment because news of the Middle East de-escalation only emerged in the last two days. Meanwhile, the internal factor started when BI raised the BI Rate, which the market immediately responded to positively with a 7 percent gain, followed by fiscal policies such as massive MBG efficiency measures, a moratorium on KDMP construction, and the suspension of the single-door commodity export policy,” he clarified.