IHSG weakens, weighed down by global and domestic sentiment
The Indonesian Composite Index (IHSG) is expected to continue its decline on Thursday, weighed down by a combination of global and domestic sentiment. The IHSG opened down 7.60 points, or 0.13 percent, at 5,865.77, while the LQ45 index of top stocks fell 1.77 points, or 0.30 percent, to 581.11. “The IHSG is expected to continue its correction to test the support area around 5,800-5,745 in today’s trading,” said Ratna Lim, Head of Research at Phintraco Sekuritas.
From the global front, market attention is focused on rising geopolitical risk premiums following the latest attacks between the United States and Iran, and stern warnings from US President Donald Trump. Trump stated that a ceasefire had ended and the US launched attacks on Iran, revoking permits that allowed Iran to sell crude oil. He threatened a naval blockade as retaliation for attacks on tankers transiting the Strait of Hormuz. The heightened tensions in the Middle East have pushed up global crude oil prices, sparking concerns over energy supply disruptions.
Meanwhile, the minutes from the Federal Reserve’s meeting revealed a divided outlook on monetary policy prospects. Some participants agreed on a scenario where inflation would return to the 2 percent target on its own, while others saw inflation remaining high due to strong demand related to artificial intelligence (AI), the Middle East conflict, or the impact of tariffs. Spot gold prices weakened following the release of the FOMC minutes and the rise in oil prices and inflation.
On the domestic front, S&P Dow Jones Indices announced the results of its evaluation, placing Indonesia under review for a potential downgrade from emerging market to frontier market status. The Indonesia Stock Exchange (BEI) plans to hold a meeting with S&P Dow Jones Indices following this decision. The Ministry of Finance has targeted foreign investment funds entering the Indonesian Financial International Centre (PFII) of around IDR 300 trillion to IDR 500 trillion. However, warnings from several international institutions regarding investment in the Indonesian capital market have triggered capital outflows due to reduced foreign investor confidence.
Bank Indonesia’s Consumer Survey showed the Consumer Confidence Index fell to 117.8 in June 2026 from 120.9 in May 2026, its lowest level since September 2025. The Current Economic Conditions Index and Consumer Expectations Index also declined to 109.2 and 126.4, respectively, in June 2026, from 112.2 and 129.7 in May 2026. Despite the decline, the indices remain above the 100 level, indicating that consumer confidence remains optimistic. Investors are now awaiting retail sales and motorcycle sales data.
On Wednesday (8/7), European markets weakened, with the Euro Stoxx 50 down 1.79 percent, the UK’s FTSE 100 down 1.66 percent, Germany’s DAX down 2.23 percent, and France’s CAC 40 down 2.18 percent. Wall Street also closed lower, with the Dow Jones Industrial Average down 1.09 percent and the S&P 500 down 0.28 percent, while the Nasdaq Composite managed a 0.27 percent gain. In Asian markets this morning, the Nikkei rose 1.94 percent, the Shanghai index fell 0.36 percent, the Kospi rose 0.25 percent, and the Strait Times index rose 0.78 percent.