JCI Drops to 6,628 as US-Iran Conflict and High Interest Rates Drive Weakness

The Indonesia Composite Index (IHSG) on the Indonesia Stock Exchange (BEI) opened significantly weaker in trading on Monday (18/05/2026). This decline was triggered by market participants’ concerns regarding a potential era of prolonged high interest rates resulting from the escalating conflict between the United States and Iran.

The IHSG corrected by 94.34 points, or 1.40 per cent, to the 6,628.98 position at the market opening. In line with the main index, the LQ45 blue-chip index also fell by 9.37 points (1.42 per cent) to the 648.51 level.

Ratna Lim, Head of Research at Phintraco Sekuritas, explained that the index’s movement this week will depend heavily on the 6,700 psychological level. “It is estimated that if the IHSG breaks below the 6,700 level, it could potentially test the 6,500-6,550 level this week,” she stated in an official study in Jakarta.

The primary negative sentiment stems from geopolitical uncertainty in the Middle East. The US-Iran conflict has driven up global crude oil prices, which in turn has triggered fears of global inflation. This condition is reflected in the surge of 30-year US Treasury yields, which reached 5.1 per cent.

Investors are now awaiting the release of the FOMC Minutes from the US central bank, the Fed, to seek clues regarding the next direction of monetary policy, following US inflation data that exceeded market expectations. Additionally, the failure of the meeting between US President Donald Trump and Chinese President Xi Jinping to reach a major agreement has added further pressure to global markets.

Domestically, market attention is focused on the Bank Indonesia (BI) Board of Governors Meeting scheduled for Wednesday (20/05). The central bank is predicted to maintain the BI Rate at 4.75 per cent. Market participants will also closely monitor credit growth data, first-quarter 2026 current account transactions, and the M2 Money Supply.

Meanwhile, FTSE Russell has decided to postpone the reweighting of the Indonesian capital market index, including free float adjustments and the addition of new shares (IPOs), until the next review in September 2026.

The morning weakness of the IHSG is consistent with trends in other Asian markets. The Shanghai Index recorded a decline of 0.21 per cent, while the Singapore Straits Times weakened by 0.33 per cent. Economic uncertainty in China is also a focal point, where the People’s Bank of China (PBoC) is expected to maintain its one-year prime lending rate at 3 per cent.