Next Week's Sentiment: Markets Still Shadowed by US-Iran Conflict
Global market sentiment throughout the week of 5-9 October 2026 is expected to remain overshadowed by tensions between the United States and Iran, developments in the Strait of Hormuz, and the direction of oil prices following meetings between OPEC and non-OPEC producing nations.
Energy movements will be a key focus as they can influence inflation and global interest rate policies. Bond markets are also under scrutiny after rising yields in several countries pressured risk assets.
From the economic calendar, investor attention will turn to US services sector activity and the FOMC minutes to seek clues regarding the next interest rate hike. Eurozone producer inflation will also provide insight into cost pressures at the corporate level.
Meanwhile, domestic sentiment will be influenced by Indonesia’s foreign exchange reserves, consumer confidence, and retail sales. The Chinese calendar remains relatively quiet due to the Golden Week holiday lasting until mid-week.
Japan Consumer Confidence September 2026
The week will open with the release of the Japan consumer confidence index on Monday (5/10/2026) at 12:00 WIB. The previous index stood at 35.5 and is expected to decline to 35.3 according to consensus, while other projections sit at 35.7. The low position indicates that Japanese households are not yet fully optimistic about economic conditions and purchasing power. A deeper decline could signal that rising living costs and tighter monetary policy are beginning to limit consumption. Such a condition could potentially hinder the yen’s strengthening by raising questions regarding the Japanese economy’s ability to maintain growth after the Bank of Japan raised interest rates to 1.25%.
Eurozone Producer Inflation August 2026
Eurozone producer inflation will be announced at 16:00 WIB. On a monthly basis, the producer price index previously rose by 1.6% and is expected to increase to 1.9% according to consensus, while other projections are at 2.0%. On an annual basis, price growth at the producer level is projected to surge from 5.8% to 8.3%. This increase indicates that cost pressures faced by companies could strengthen again, especially if energy prices remain high. If producers pass these costs on to consumers, headline inflation could rise again. Results above expectations could strengthen the euro and European bond yields by narrowing the European Central Bank’s room to ease policy.
US ISM Services September 2026
The US ISM services sector index will be released at 21:00 WIB. The previous index was at 55.4, with consensus expecting an increase to 55.7, although other projections are at 55.0. All forecasts remain above the 50 threshold, indicating that the services sector continues to expand. Beyond the headline figure, markets will watch components such as business activity, new orders, employment, and prices. In the previous period, the employment component was still contracting at 47.8, while the price index remained relatively high at 72.6. Strong activity accompanied by high price pressure could strengthen the US dollar and Treasury yields by supporting high interest rate policies. Conversely, a sharp weakening could reduce expectations for further rate hikes.
Indonesia Foreign Exchange Reserves September 2026
Bank Indonesia is scheduled to announce foreign exchange reserves on Wednesday at 10:00 WIB. The previous reserve position increased to US$146.5 billion from US$145.3 billion, though the calendar does not yet include a market consensus for the latest period. Investors will assess whether reserves remain strong after facing US dollar volatility, changes in capital flows, and increased geopolitical uncertainty. A limited decline is not necessarily a negative signal if caused by government debt payments or rupiah stabilisation. However, a sharp decline could increase concerns regarding pressure on the exchange rate. Conversely, a stable or increasing position would strengthen the perception that Indonesia possesses an adequate external buffer to face global market turbulence.
FOMC Minutes September 2026
The minutes of the Federal Open Market Committee meeting will be released on Thursday at 01:00 WIB. The document pertains to the 15-16 September meeting, during which the Federal Reserve unanimously raised the federal funds rate target by 25 basis points, from 3.50%-3.75% to 3.75%-4.00%. The hike was implemented because inflation remains too high, while economic activity was deemed sufficiently strong. Markets will seek explanations regarding the extent of support among FOMC members for the next hike. September projections indicated a chance for one additional hike before the end of the year, but the timing will depend on inflation, labour, energy prices, and financial conditions. The minutes are becoming increasingly important as Kevin Warsh seeks to reduce forward guidance. A hawkish tone could lift the US dollar and Treasury yields while pressuring the rupiah, gold, and equity markets. Conversely, significant differences in view could reduce confidence in the next interest rate hike.
Indonesia Consumer Confidence September 2026
Indonesia’s consumer confidence index will be announced at 10:00 WIB. The previous index was at 118.5 and is projected to decline slightly to 118. Despite the potential weakness, a position above 100 still shows that the public remains generally optimistic about economic conditions. Markets will watch consumer perceptions regarding income, employment, and the economic outlook for the next six months. A deeper decline could indicate that households are starting to curb spending due to price pressures and global uncertainty. Conversely, a stable result could strengthen the prospects for domestic consumption and provide support for consumer, retail, and banking stocks.
Indonesia Retail Sales August 2026
Indonesia’s retail sales will be announced on Friday at 10:00 WIB. Growth is projected…