IHSG Weakens as Iran–US Conflict Creates Uncertainty Over Fed Direction
Jakarta (ANTARA) - The Jakarta Stock Exchange’s Composite Index (IHSG) of the Indonesia Stock Exchange (BEI) edged lower on Friday as the Iran–United States conflict drove uncertainty over the path of the Fed’s benchmark rate. The IHSG opened down 11.07 points, or 0.14%, at 7,699.47. Meanwhile, the LQ45 index of 45 leading stocks fell 1.61 points, or 0.20%, to 786.21.
“Kiwoom Research estimates that yesterday’s technical rebound will not be long-lasting, with the resistance band at a critical level of 7,712–7,720. Investors are advised to increase cash positions toward the end of the week to anticipate high volatility during the weekend,” said Liza Camelia Suryanata, Head of Research at Kiwoom Sekuritas Indonesia, in Jakarta on Friday.
Internationally, the escalation of the Iran–US–Israel conflict has entered its sixth day, heightening concerns about energy inflation and the direction of Fed policy. Most immediately, the US central bank will hold a Federal Open Market Committee (FOMC) meeting on 17–18 March 2026 to determine its policy rate.
“Markets now expect the Fed to cut rates by around 40 bps in 2026, down from around 50 bps before the conflict began,” Liza said.
Iran launched a wave of missiles at Israel, while US and Israeli fighter jets continued striking several targets in Iran. Attacks on tanker ships in the Gulf region and Iranian drones entering Azerbaijan raise the risk of the conflict spreading to other energy-producing countries. President Donald Trump also said the US wishes to play a role in choosing Iran’s next leader.
Meanwhile, the IMF warned that this conflict could test global economic resilience and could trigger inflationary pressures and slower growth if it endures. Oil prices rose sharply amid concerns about supply disruptions from the Middle East, with Brent crude up 4.93% to $85.41 per barrel, and US WTI up 8.51% to $81.01 per barrel.
Domestically, China’s slowdown mentioned at the Two Sessions forum could weigh on the Indonesian economy, since China is Indonesia’s largest trading partner, accounting for around 24% of non-oil-and-gas exports in 2025 worth about $64.82 billion. Thus, slower Chinese industrial activity could reduce demand for commodities and raw materials from Indonesia. In addition to trade, the impact could also surface in investment given China is one of Indonesia’s largest investors, with about $7.5 billion in realised investments in 2025, and historically every 1% slowdown in China’s economy can reduce Indonesia’s growth by about 0.3%.
In Thursday trading (05/03), European stock markets broadly fell, with Euro Stoxx 50 down 1.46%, UK’s FTSE 100 down 1.45%, Germany’s DAX down 1.61%, and France’s CAC down 1.49%. Wall Street also declined on Thursday (05/03), with the Dow Jones Industrial Average down 1.61% at 47,954.74, the S&P 500 down 0.56% at 6,830.71, and the Nasdaq Composite down 0.26% at 22,748.99. Asia-Pacific markets were mixed in today’s morning trade, with the Nikkei up 80.59 points (0.15%) at 55,358.69, the Hang Seng up 263.59 points (1.04%) at 25,584.93, the Shanghai Composite up 0.33 points (0.01%) at 4,108.90, while the Straits Times fell 17.90 points (0.37%) to 4,828.66.