Indonesia Stock Under Strain as Tariff Shock Hits

Shares in Indonesia dipped 95 points or 1.5% to 6,219 on Friday morning trade, retreating for the third session following a sell-off on Wall Street overnight after the Trump administration said it would impose new tariffs on 60 trading partners, replacing the temporary 10% tariffs that expire today. All major sectors were under pressure, led by cyclicals, transport, infrastructure, and basic materials. Among the biggest laggards were Petrindo Jaya Kreasi (-6.0%), Bumi Resources (-3.8%), Charoen Pokphand (-3.6%), and Bank Mandiri (-3.2%). Still, local markets are heading for a modest weekly rise, up around 0.2% so far to mark the third straight weekly advance. This was supported by an unexpected move by the central bank that paused its policy tightening following a total 100bps hike since May. Meanwhile, efforts to boost fiscal efficiency continue, with the government slashing its free school meals budget further and paring back defence and police budgets.

Indonesian stocks jumped 73 points or 1.2% to 6,405 in early deals on Thursday, marking a five-week peak and setting the stage for a bull market from their early June low. Sentiment improved as Bank Indonesia held its key rate steady at 5.75%, pausing after a total of 100 bps of hikes since May, while launching fresh incentives to lure foreign inflows. On the fiscal side, the government trimmed its free school meals budget to IDR 229 trillion from IDR 268 trillion, with Finance Minister Purbaya Yudhi hinting defense spending may also be pared back to prioritise poverty reduction. However, gains were capped by weaker U.S. futures and higher oil prices, after President Trump threatened strikes on Iranian infrastructure in response to potential shipping attacks in the Strait of Hormuz. All major sectors advanced, led by tech, energy, basic materials, and non-cyclicals. Standout movers included Darma Henwa (8.6%), Petrosea (6.4%), Erajaya Swasembada (5.0%), and Raharja Energi Cepu (4.9%).

Indonesia's IDX Composite rose 0.4% to 6,365 in Wednesday morning trading, extending gains for a tenth session and lingering at its highest level in five weeks. A strong lead from Wall Street overnight lifted sentiment following solid earnings from major U.S. companies. Domestically, Indonesia's fiscal position remained solid, Finance Minister Purbaya Yudhi said, citing a stable credit outlook and a manageable budget deficit. However, the upside was limited ahead of Bank Indonesia's policy decision later in the day. The central bank is widely expected to raise its key interest rate by 25 bps to 6.0%, following a cumulative 100bps hike in May and June aimed at supporting the rupiah. Separately, public criticism mounted over government plans to involve military officers in collecting taxpayer data. Aneka Tambang climbed 2.3% after reports that BlackRock increased its stake in the miner. Other standouts were ESSA Industries (3.3%), Medco Energi (3.1%), and Merdeka Copper Gold (2.2%).