JCI weakens amid concerns over high interest rate era due to conflict

The Indonesia Composite Index (JCI) on the Indonesia Stock Exchange (IDX) weakened on Monday, driven by market concerns regarding a high interest rate era resulting from uncertainty surrounding the conflict between the United States and Iran, which has pushed crude oil prices higher.

The JCI opened lower by 94.34 points, or 1.40 per cent, to the 6,628.98 level. Meanwhile, the LQ45 index, comprising 45 blue-chip stocks, dropped 9.37 points, or 1.42 per cent, to 648.51.

“It is estimated that if the JCI breaks below the 6,700 level, it could potentially test the 6,500-6,550 range this week,” said Ratna Lim, Head of Research at Phintraco Sekuritas, in her analysis in Jakarta on Monday.

Internationally, the conflict between the US and Iran continues to influence global stock indices as the escalation between the two nations fluctuates. US Treasury yields have increased, with the 30-year tenor reaching 5.1 per cent, amid fears of inflation and rising global interest rates caused by the surge in crude oil prices.

Market participants are also awaiting the release of the FOMC Minutes from the US Federal Reserve, seeking indications regarding the direction of interest rates following US inflation data that exceeded expectations. Furthermore, the meeting between US President Donald Trump and Chinese President Xi Jinping concluded without a major agreement, leading to market disappointment.

In China, investors are monitoring several economic indicators, such as industrial production and retail sales. The People’s Bank of China (PBoC) is expected to maintain its one-year and five-year loan prime rates at 3 per cent and 3.5 per cent, respectively.

Domestically, investors are focused on the upcoming Board of Governors Meeting of Bank Indonesia (BI), which is expected to maintain the BI Rate at 4.75 per cent on Wednesday (20/05). Additionally, market participants will be watching the release of credit growth, Q1-2026 current account data, and the M2 Money Supply this week.

Meanwhile, FTSE Russell stated that it has reviewed developments in the Indonesian capital market but is delaying a full index reweighting, free float increases, and the addition of new IPOs until its review in September 2026.

In recent trading, European stock markets closed lower on Friday (15/05), with the Euro Stoxx 50 falling 1.81 per cent, the UK’s FTSE 100 dropping 1.71 per cent, Germany’s DAX declining 2.07 per cent, and France’s CAC 40 losing 1.60 per cent. US Wall Street markets also declined on Friday, with the Dow Jones Industrial Average falling 1.07 per cent, the S&P 500 dropping 1.24 per cent, and the Nasdaq Composite decreasing 1.54 per cent. Regional Asian markets also saw declines this morning, including the Nikkei, Shanghai, Hang Seng, and Straits Times indices.