Start of Semester II Like Hell! 9 Sentiments That Could Shake the IHSG and Rupiah

The Indonesian financial market is expected to strengthen at the start of the second semester of 2026. On Wall Street, US stock markets ended the first half of the year with a celebration. Stocks surged sharply on Tuesday, supported by the chip sector. The Dow Jones Industrial Average rose 136.46 points, or 0.26%, to close at a record high of 52,319.20. Meanwhile, the S&P 500 gained 0.79% to 7,499.36, and the Nasdaq Composite jumped 1.52% to 26,213.72. The rally was driven by semiconductor stocks, with Nvidia up 2.6%, Advanced Micro Devices (AMD) soaring 7.7%, and Intel gaining 6%. The VanEck Semiconductor ETF (SMH) rose more than 3%, bringing its year-to-date gain to 82%. Tuesday marked the final trading day for the first half and the second quarter. Over the six-month period, the Dow Jones rose 8.9%, its best first-half performance since 2021. The S&P 500 gained 9.6%, while the Nasdaq led with an increase of more than 12%. The Russell 2000 surged nearly 22%, its best first half since 1991. The year began with high volatility. Although major indices hit new records, these achievements occurred amid energy price turmoil due to the Iran war and uncertainty over the sustainability of artificial intelligence investment spending. Tim Holland, Chief Investment Officer at Orion, told CNBC International that the lesson from the first half of 2026 is that corporate earnings matter more than almost any other factor, except perhaps interest rates. The second quarter proved particularly strong as concerns over the AI rally eased and the war appeared to be moving closer to a resolution. The S&P 500 and Nasdaq surged 14.9% and 21.4% respectively in the second quarter, marking their biggest quarterly gains since the second quarter of 2020. The Dow Jones rose 12.9% in the same period, its best quarterly performance since the fourth quarter of 2022. According to Holland, as long as there is no escalation in the conflict between the United States and Iran, the bull market is expected to continue broadening through the end of the year, with investors rotating into cheaper sectors. He noted that while the world remains focused on AI capital expenditure, value stocks have actually performed well throughout the year, including during June. He added that interest rates are likely to remain relatively high, which tends to hinder expensive growth stocks but benefits economically sensitive sectors. Entering the first day of the second semester of 2026, the Indonesian financial market is expected to face many challenges from both external and domestic factors. One key sentiment is the development of the war and uncertain peace prospects. Iran on Tuesday reiterated it would not meet with a senior US envoy, leaving the outlook for long-term peace uncertain. Tehran stated its current focus is on finalising the details of a ceasefire agreed two weeks ago before addressing more complex issues, including its nuclear programme. Iran also affirmed it will continue to control traffic in the Strait of Hormuz with Oman and plans to impose shipping tariffs in mid-August after a 60-day negotiation period ends. Despite ongoing tensions, oil prices have continued to weaken, though the United Nations warns the war’s impact could still drive up food and energy prices in vulnerable countries. The temporary US-Iran agreement also includes efforts to end the Israel-Hezbollah conflict, but implementation remains in doubt. Domestically, the government officially launched the mandatory B50 biodiesel programme on 1 July 2026, opening a new chapter in national energy policy built over nearly two decades. Unlike previous rollouts, the B50 implementation will not be immediate. The government has set a three-month transition period to allow distribution chains and fuel blending processes to adjust gradually before all filling stations in Indonesia sell B50 fully by 1 October 2026. The Director General of New, Renewable Energy and Energy Conservation at the Ministry of Energy and Mineral Resources, Eniya Listiani Dewi, explained that the transition period is intended to deplete existing B40 biodiesel stocks while giving business entities time to make operational adjustments. During this period, blending will be carried out in stages with specifications gradually increasing towards B50. The government noted that around 30 biofuel business entities are involved in the blending process, with PT Pertamina (Persero) and AKR controlling approximately 70% of the national distribution volume. President Prabowo Subianto previously stated that the B50 launch is part of a strategy to strengthen national energy security.