Indonesia Shares Trade Lower as Inflation Accelerates

Indonesian shares slipped 36 points or 0.5% to 6,566 in Wednesday morning trade, breaking a two-day advance as U.S. futures mostly weakened after Wall Street logged a third straight loss overnight on surging bond yields and oil prices. Locally, August headline inflation quickened to 3.19% from July’s three-month low of 2.28%, slightly above expectations, driven by higher food costs under El-Nino’s impact, while core inflation hit its highest since March 2023. Still, losses were partly offset by a surprise July trade surplus as exports outperformed. Separately, newly appointed Bank Indonesia governor Destry Damayanti projected 2027 GDP growth at 5.2%–6% and estimated the rupiah at 17,300–17,800 per dollar next year. Infrastructure, energy, and non-cyclicals weighed, with notable laggards including Petrindo Jaya Kreasi (-3.9%), Vale Indonesia (-2.8%), Alamtri Minerals (-2.7%), and Kalbe Farma (-1.9%).

Indonesian equities opened September on a firm note, with the the IDX Composite Index up 34 points or 0.6% to 6,561 in early trade, extending gains from the prior session. Strength was broad-based, led by healthcare, industry, and financials, as sentiment drew support from fiscal credibility anchored by the proposed 2.40% deficit target for 2027. Budget execution through July also remained solid, with revenue up 21.3% yoy and expenditure rising 18.2%. Externally, factory activity in top trading partner China accelerated, expanding for a ninth straight month in August, bolstering optimism. However, caution lingered ahead of key domestic releases later today, including August inflation and July trade data. Meanwhile, U.S. stock futures were mostly lower after overnight losses on Wall Street, though major indices still managed monthly advances. Early movers included Bumi Resources (3.1%), Bank Rakyat Indonesia (2.5%), Charoen Pokphand (2.4%), and Bank Mandiri (2.1%).

Indonesian shares fell 27 points, or 0.4%, to 6,487 in Monday morning trade, extending weakness from the prior session. A sharp drop in U.S. futures weighed on sentiment after Fed Chair Kevin Warsh’s hawkish Jackson Hole remarks lifted odds of a September hike, while oil prices surged following U.S. strikes on Iranian rocket launchers over the weekend. Locally, caution persisted ahead of key releases this week, including August inflation and July trade data. Still, losses were cushioned by news that the House of Representatives approved Destry Damayanti as Bank Indonesia’s new governor for 2026–2031, succeeding Perry Warjiyo, who resigned in July. Basic materials, health, and infrastructure led the decline, with notable laggards including Hartadinata Abadi (-4.7%), Merdeka Copper Gold (-3.0%), and Aneka Tambang (-1.6%). Still, markets are heading for the second straight monthly gain, up near 4%, lifted by continued bargain hunting after markets hit their lowest in six years in June.