The Indonesia Stock Exchange Composite Index (IHSG) opened lower on Thursday, October 24, 2024, shedding 8.89 points, or 0.11%, to 7,778.66. The LQ45 index, representing Indonesia’s top blue-chip stocks, also declined, losing 1.80 points, or 0.19%, to settle at 952.94. This modest decline in the Indonesian market reflects the broader global investor sentiment, which has been shaped by rising uncertainty ahead of the U.S. presidential election, a significant event expected to influence the direction of financial markets worldwide.
Fanny Suherman, Head of Research at BNI Sekuritas Retail, remarked that the IHSG’s movement is part of a broader trend of global caution as market participants remain uncertain about the election’s potential impact. Suherman noted that the Indonesian market had performed well throughout much of October, but the current downward shift suggests that investors are holding back, seeking more clarity before making substantial moves. The ongoing global economic uncertainties, combined with domestic concerns, have resulted in a restrained market environment, with only limited trading activity and minor corrections taking place.
Global economic dynamics are further complicating the situation. On Tuesday, October 22, 2024, the International Monetary Fund (IMF) released its updated global growth forecasts, adjusting its outlook for several major economies. The IMF raised its 2024 growth projections for the U.S., Brazil, and the U.K., signaling strength in these economies, while simultaneously reducing its forecasts for China, Japan, and the Eurozone. The mixed economic picture across key global markets has created a challenging environment for investors, who must now weigh the diverging prospects of Western and Asian economies.
One of the key drivers of market sentiment in Asia has been China’s recent announcement of a 2 trillion yuan special government bond issuance. This measure, aimed at stabilizing China’s financial markets and supporting the broader economy, has provided a short-term boost to investor confidence. However, concerns about China’s longer-term economic trajectory remain. While the bond issuance is expected to provide immediate liquidity, there are lingering questions about the sustainability of China’s growth, especially given its ongoing struggles with debt and slowing demand in key industries.
In the United States, financial markets have been hit by a combination of rising Treasury yields and mixed corporate earnings reports. The benchmark 10-year U.S. Treasury yield climbed to its highest level in three months, a development that has sparked concerns about higher borrowing costs and potential tightening in financial conditions. This rise in yields has had a particularly strong impact on technology and large-cap stocks, which are more sensitive to interest rate fluctuations. In addition, recent corporate earnings reports from major firms like McDonald’s and Coca-Cola have come in below expectations, further contributing to the decline in stock prices.
On Wednesday, October 23, U.S. markets closed in negative territory, with the Dow Jones Industrial Average falling 0.96% to 42,514.95. The S&P 500 dropped 0.92%, closing at 5,797.42, while the Nasdaq Composite, home to many tech giants, saw a sharper decline of 1.60%, ending the day at 18,276.65. Investors remain cautious as they brace for the potential impact of the U.S. presidential election, which could bring significant changes to economic policy, trade relations, and regulatory environments. The uncertainty surrounding the election has exacerbated market volatility, with many investors opting to stay on the sidelines until more definitive outcomes are known.
For Indonesia, the IHSG’s decline mirrors the broader global uncertainty. The combination of rising U.S. Treasury yields, concerns about corporate earnings, and the upcoming U.S. election has led to a risk-averse environment. Investors in Indonesia are not immune to these global concerns, and their cautious behavior reflects the broader uncertainty gripping markets worldwide. As the election draws closer and other global economic factors unfold, market participants in Indonesia will continue to navigate a complex and volatile landscape.
