Jakarta Composite Index Faces Volatility Amid Rising Geopolitical Tensions

RRI.CO.ID, Jakarta - The Jakarta Composite Index (JCI) is bracing for a turbulent week as rising geopolitical tensions and shifting US trade policies inject fresh uncertainty into global markets. Analysts at PT Indo Premier Sekuritas say the mounting risks are likely to keep investors cautious.

“The JCI has the potential to move volatily this week with a tendency toward consolidation, with support at 8,031 and resistance at 8,437,” equity analyst Imam Gunadi said in an official statement in Jakarta on Monday, March 2, 2026, as quoted by Antara.

Imam said escalating conflict involving Iran, Israel, and the United States, along with tensions in South Asia, has lifted the global risk premium, particularly as developments unfold around the Strait of Hormuz, a crucial artery for global energy distribution.

“This uncertainty could strengthen the US dollar and push up energy commodity prices, which typically trigger a rotation into safe-haven assets and suppress capital flows to emerging markets, including Indonesia,” he said.

Still, higher oil and coal prices could provide a buffer for Indonesia’s energy and mining sectors, especially if commodity prices remain elevated. As a major coal exporter, Indonesia stands to benefit from higher average selling prices and potentially improved margins among listed companies in related industries.

“In uncertain global conditions, commodity-based stocks often serve as a hedge against geopolitical risks and global inflation,” Imam added.

However, he cautioned that a sharp and prolonged surge in energy prices could fuel global inflation and pressure the rupiah. A weaker rupiah combined with rising global bond yields may heighten JCI volatility, as foreign investors typically trim exposure to riskier assets during periods of stress.

In the near term, he said, the JCI’s direction will depend on whether higher energy prices remain supportive for commodity issuers or evolve into an inflationary shock that threatens macroeconomic stability.

Beyond geopolitical tensions, shifting US trade policy and warnings from credit rating agencies about Indonesia’s rising fiscal strain are also weighing on sentiment.

“This combination of issues has created a cautious mood across global and domestic financial markets,” Imam said.

The economic fallout from Middle East tensions is closely tied to developments in the Strait of Hormuz, which handles roughly 20 to 25 percent of the world’s daily crude oil and LNG supply. Any disruption to the route could jolt global energy markets, disrupt supply chains, and drive up shipping insurance costs.

Adding to uncertainty, US economic policy shifted significantly last week. The US Supreme Court ruled that most global import tariffs imposed under the Trump administration exceeded legal authority, forcing the government to seek new legal grounds to maintain parts of the policy. In response, President Donald Trump announced plans to raise global import tariffs to 15 percent.

Meanwhile, the US Department of Commerce imposed anti-subsidy duties ranging from 86 percent to 143.3 percent on solar panels from several countries, including Indonesia, arguing that the products benefited from unfair subsidies.

“These high tariffs could curb Indonesia’s renewable energy exports to the US and add pressure to the sector’s trade balance,” Imam said.

On the domestic front, S&P Global Ratings warned that Indonesia’s fiscal pressures are mounting, with the interest payments-to-state revenue ratio estimated to remain above 15 percent, a key benchmark for fiscal health. While the outlook remains stable, a prolonged breach of that threshold could raise the risk of a credit rating downgrade.

The warning, Imam said, reinforces investor and policymaker caution as Indonesia navigates global turbulence alongside domestic fiscal challenges.

Markets are also awaiting a series of key economic data releases in early March, including Indonesia’s trade balance and inflation figures, manufacturing PMI data from Indonesia, China, and the United States, US initial jobless claims, nonfarm payrolls, the US unemployment rate, and Indonesia’s foreign exchange reserves. ***