Environmental Clampdown Rattles Indonesia Markets

Indonesian shares advanced 37 points or 0.5% to 7,094 in early Wednesday trade, extending gains for a third session after record closes on Wall Street’s S&P 500 and Nasdaq, lifted by U.S. President Donald Trump’s pause in efforts to reopen the Strait of Hormuz to allow time for a deal with Iran. Locally, Indonesia's GDP grew 5.61% yoy in Q1 2026, beating market forecasts and marking the fastest yearly expansion since 2022, boosted by festive-season demand, government spending on the Free Nutritious Meal Program, and a favorable low base. However, strength was tempered by a smaller trade surplus in March, reflecting sharp declines in coal and coffee exports. Meanwhile, the rupiah's weakness persisted, adding pressure to the economy. All sectors moved higher, led by basic materials, non-cyclicals, and industrials. Top movers included J Resources Asia Pacific (11.8%), TBS Energy Utama (8.6%), Unilever Indonesia (5.5%), and Energi Mega Persada (4.6%).

Indonesian stocks rose 43 points or 0.6% to 7,015 in Tuesday morning trade, marking gains for a second straight session as U.S. equity futures edged higher following Wall Street’s overnight weakness due to renewed U.S.–Iran tensions and supply risk fears. Sentiment was buoyed by April inflation easing to 2.42%, the lowest since August 2025 and comfortably within Bank Indonesia’s 1.5%–3.5% target. However, gains were capped by caution ahead of Q1 GDP data releases later today, with markets expecting a slowdown from Q4’s three-year peak amid fiscal strain and rising debt repayments. Meanwhile, the rupiah hit a record low of around IDR 17,400 per dollar on Monday, stoking doubts over policy effectiveness as foreign reserves dwindle. Financials, basic materials, and infrastructure led the advance, with Barito Pacific (5.1%), Semen Indonesia (4.5%), Bank Central Asia (2.5%), Bank Mandiri (1.8%), and AKR Corporindo (1.3%) among notable movers.

Indonesia’s IDX Composite jumped 108 points, or 1.5%, to 7,065 in early trade on the first trading day of May, bouncing back from a 2% plunge previously as bargain hunting emerged after the index hit a three-week low. Sentiment was also boosted by comments from U.S. President Trump on efforts to “free” ships stranded on the Strait of Hormuz, easing concerns over global trade flows. Locally, the government signaled a proactive stance in addressing a widening budget strain and energy challenges, with measures including panda bond issuance, energy security deals, and subsidy recalibration. However, gains were capped by caution ahead of key domestic releases. April inflation and March trade figures are due later today, followed by Q1 GDP Tuesday and April forex reserves in the coming days. Advances were broad-based, led by basic materials, infrastructure, and cyclicals. Notable gainers included Chandra Asri (5.2%), Charoen Pokphand (3.2%), Indofood (2.2%), and Bank Rakyat Indonesia (1.3%).