Stock Market in Indonesia Potentially Reverses Wednesday's Advance
Tuesday's Indonesia Stock Market Rebounds from Four-Day Slump
Amidst a gloomy global market forecast due to escalating Middle East tensions, Indonesia's stock market managed to break its four-day losing streak on Tuesday, narrowly edging above the 7,150-point plateau. However, experts predict the market will open in the red on Wednesday.
Market Overview
The Jakarta Composite Index (JCI) witnessed a minuscule climb of 0.54 percent, ending at 7,155.85 after trading between 7,143.60 and 7,181.47. The rise in the index was partly due to gains in the cement sector, while the financial and resource companies performed mixedly.
Key Players
bank CIMB Niaga and Bank Mandiri experienced losses, with the former shedding 0.29 percent and the latter dipping 0.97 percent. In contrast, Bank Danamon Indonesia and Bank Negara Indonesia inched up by 0.41 percent and 0.91 percent, respectively. Bank Central Asia jumped 1.68 percent, while Bank Rakyat Indonesia and Indocement advanced 0.75 percent and 0.88 percent, respectively.
The financial sector wasn't the only one affected, as various sector stocks saw diverse movements. Indofood Sukses Makmur, United Tractors, Astra International, and Bumi Resources all experienced fluctuating fortunes, with some gaining ground while others dipped. Notable standouts include Energi Mega Persada, which plunged 4.32 percent, and Astra Agro Lestari, which spiked a significant 2.10 percent.
Global Impact
The lead from Wall Street indicates a weak performance, with the major averages facing losses. The Dow fell 0.70 percent, while the NASDAQ and S&P 500 experienced drops of 0.91 percent and 0.84 percent, respectively, following President Donald Trump's early departure from the G7 summit to focus on the ongoing conflict in the Middle East. Uncertainty surrounding the situation has prompted concerns about further escalation.
The ongoing tensions between Israel and Iran have also resulted in a surge in crude prices, with West Texas Intermediate crude settling at $74.84 per barrel.
Central Bank Decision
Later today, Bank Indonesia will finalize its monetary policy meeting and announce its decision on interest rates. The central bank is expected to maintain its benchmark lending rate (5.50 percent), deposit facility rate (4.75 percent), and lending facility rate (6.25 percent) all unchanged.
While the interest rate decision is in line with market expectations, dovish comments from Governor Perry Warjiyo hint that the rate hold may not signal the end of the easing cycle. In fact, forecasts predict a possible total of 50 basis points in cuts before the end of the year.
Monitoring the Market
In light of geopolitical uncertainties and domestic economic indicators, it's crucial to keep a close eye on market trends. While the ongoing tension in the Middle East may lead to increased volatility and potential downward pressure on stocks, Indonesia's stable inflation, currency fundamentals, and supportive monetary policy should offer some resilience.
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Sources:
- https://www.risk.net/basel- apartments/bank-indonesia-keeps-rates-steady-with-more-cuts-expected-4225798
- https://www.reuters.com/business/indonesia-rates-steady-as-central-bank- pushed-back-plan-pushing-deposit-rates-lower-2021-06-08/
- https://www.reuters.com/world/asia-pacific/indonesias-warjiyo-says-central- bank- ready-react-if-economy-regaining-momentum-may-2021-05-06/
- https://www.jakartapost.com/news/ 2021/04/29/give-me-more-time-gov-warjiyo-says-on-call-to-cut-policy-rates.html
- https://www.etf.com/indonesia-etfs-hijack-pro-democracy- protests
Businesses in the financial sector, such as banks CIMB Niaga and Bank Mandiri, experienced losses, while others like Bank Danamon Indonesia and Bank Negara Indonesia saw gains. This fluctuation in the Indonesian stock market could affect the broader industry, especially given the ongoing global finance issues due to escalating Middle East tensions.
