Indonesian Stock Market Poised for Recovery as Global Sentiment Improves

Wall Street’s bullish momentum on Tuesday is setting up a potentially stronger opening for Asian equities, including Indonesia’s benchmark index. The Dow Jones Industrial Average surged 664.18 points to reach 47,112.45, climbing 1.43 percent, while the NASDAQ added 153.59 points (0.67%) to close at 23,025.59. The S&P 500 gained 60.76 points or 0.91 percent, finishing at 6,765.88. This rally was fueled by renewed confidence regarding interest rate expectations, particularly after dovish signals from Federal Reserve officials.

The positive global backdrop comes at an opportune moment for the Jakarta market. After climbing nearly 60 points (0.78%) during a two-day winning streak, the JCI Index experienced a pullback, finishing Tuesday at 8,521.88—down 48.37 points or 0.56 percent. The index traded within a range of 8,487.22 to 8,574.38 during the session. While recent sessions have been mixed, market participants anticipate renewed support could push the JCI Index higher as Asian bourses take cues from Wall Street’s strength.

The Fed’s shift toward potentially more accommodative policy is key to this optimism. CME FedWatch data shows the probability of a quarter-point rate cut next month has jumped to 82.7 percent from 50.1 percent just one week prior. This repricing of rate expectations has bolstered investor confidence across emerging markets, including Indonesia.

On the sectoral front, mixed signals emerged on Tuesday. The financial sector was uneven, with Bank CIMB Niaga climbing 0.28 percent and Bank Negara Indonesia gaining 0.68 percent, while Bank Mandiri retreated 1.47 percent. Bank Central Asia rose 0.29 percent, but Bank Rakyat Indonesia stumbled 3.77 percent. Meanwhile, the food and cement sectors faced headwinds, with Indofood Sukses Makmur sliding 2.68 percent and Indocement declining 1.87 percent. Semen Indonesia tanked 2.67 percent.

Resource stocks proved resilient. Timah surged 6.67 percent while Bumi Resources skyrocketed 8.26 percent, providing a stabilizing force for the JCI Index. Aneka Tambang jumped 2.39 percent, though Vale Indonesia sank 0.78 percent. In the telecom space, Indosat Ooredoo Hutchison rallied 4.15 percent. Other actives included United Tractors gathering 0.27 percent, Astra International falling 0.39 percent, and Astra Agro Lestari remaining flat, while Energi Mega Persada surrendered 1.97 percent.

The economic backdrop supporting this sentiment includes softer-than-expected U.S. retail sales in September and a substantial deterioration in consumer confidence reported in November. The ADP employment report also pointed to job losses averaging 13,500 weekly over the four weeks ending November 8th. These data points reinforce expectations for monetary easing, which typically supports risk assets and emerging market equities.

Energy markets reflected a different tone on Tuesday, with crude oil prices falling as reports emerged of a revised Russia-Ukraine peace proposal. West Texas Intermediate crude for January delivery declined $0.96, or 1.61 percent, settling at $57.89 per barrel.

Looking ahead, the JCI Index sits just above the 8,520-point level, positioning it to potentially benefit from continued positive global sentiment. Should international markets sustain their upward trajectory, Indonesia’s equity benchmark could regain ground as investors rotate back into emerging market equities.