JCI's Bullish Streak May Run Out Of Steam As Global Headwinds Intensify

The Jakarta Composite Index has experienced a strong two-day rally, accumulating nearly 60 points or 0.78 percent in gains. Currently hovering just below the 8,420-point level, the index’s upward trajectory could stall on Friday as external pressures mount. Market participants are cautious about the week ahead, with the broader Asian region bracing for potential weakness amid softening interest rate expectations across major economies.

Global market dynamics are working against sustained regional optimism. European indices closed in positive territory on Thursday, but U.S. stock markets retreated significantly, and Asian bourses typically follow the American lead when sentiment turns defensive. This pattern suggests Indonesia’s market may face headwinds from external capital flows and risk sentiment.

Thursday’s JCI performance reflected mixed signals from different sectors. The index posted a marginal gain of 13.34 points or 0.13 percent, settling at 8,419.92 after reaching an intraday peak of 8,491.43. Telecommunications stocks provided support, while financial and resource sectors sent conflicting messages. Among major constituents, Bank Mandiri surged 1.86 percent and Indosat Ooredoo Hutchison climbed 0.94 percent, suggesting some appetite for selective buying. However, selling pressure emerged in other quarters, with Semen Indonesia tumbling 2.21 percent, Vale Indonesia stumbling 2.06 percent, and United Tractors slumping 1.10 percent.

The banking sector displayed divergent performance, with Bank CIMB Niaga rising 0.28 percent and Astra International gaining 0.39 percent, while Bank Central Asia declined 0.59 percent and Bank Rakyat Indonesia dipped 0.25 percent. Resource and commodity-linked stocks faced particular weakness, exemplified by Energi Mega Persada’s 1.06 percent drop and Aneka Tambang shedding 0.67 percent. Meanwhile, selected industrials like Indofood Sukses Makmur improved 0.71 percent and Astra Agro Lestari advanced 0.96 percent. Bank Danamon Indonesia, Bank Negara Indonesia, and Indocement remained flat.

Wall Street’s sharp downturn on Thursday provides the critical context for today’s outlook. Major U.S. indices suffered significant losses: the Dow dropped 386.51 points or 0.84 percent to 45,752.26, the NASDAQ plummeted 486.18 points or 2.15 percent to 22,078.05, and the S&P 500 fell 103.40 points or 1.56 percent to 6,538.76. Though trading began positively following Nvidia’s better-than-expected earnings and optimistic guidance, the broader rally fizzled as investors grappled with renewed concerns about the Federal Reserve’s interest rate trajectory.

The deterioration in Wall Street sentiment stems from September’s employment data. While the unemployment rate ticked up unexpectedly, job creation exceeded economist forecasts, complicating the case for additional rate cuts. CME Group’s FedWatch Tool suggests only a 39.8 percent probability of a December rate cut, down dramatically from 98.8 percent a month prior, though slightly above Wednesday’s 30.1 percent reading. This shift in rate cut expectations continues to weigh on investor confidence across asset classes.

Commodity markets added to the cautious tone, with crude oil weakening on Thursday. West Texas Intermediate crude for December delivery retreated $0.27 or 0.44 percent to $59.18 per barrel as traders reassessed geopolitical developments and diplomatic efforts surrounding the Russia-Ukraine conflict ahead of forthcoming U.S. policy decisions.

For the Jakarta Composite Index, this confluence of factors—moderating rate cut expectations, Wall Street weakness, and renewed volatility in commodity markets—poses a significant challenge to sustaining the recent two-day rally. Unless domestic catalysts emerge to counter these external headwinds, the index’s upward momentum may run out of steam in the session ahead.