Be Careful, The Fed Could Cause IDX to Plummet

Ilustration (Pixabay)

PROGRES.ID –¬†Optimism among investors about the Indonesian financial market has been boosted by the westward wind. On Wednesday’s trading (22/2/2023), the Composite Stock Price Index (IHSG) ended at 6,809.96, a sharp daily correction of 0.92%.

A total of 353 stocks declined, while only 173 stocks rose and 190 remained stagnant. Trading showed a transaction value of around IDR 8.79 trillion with 16.64 billion shares involved, a relatively small value compared to two days before when it also weakened.

Based on data from the Indonesia Stock Exchange via Refinitiv, nine of the ten sectors declined. The healthcare sector became the most burdensome sector for the index with a nearly 2.5% decline. Only the energy sector survived, rising 0.44%.

Declining healthcare stocks included KLBF, which fell significantly by 5.68%, followed by MIKA down 3.23%, and MTMH down 1.59%.

The fall of IHSG is inseparable from the decline of stocks with jumbo capitalization. GOTO and BMRI, for example, returned as the main laggards of IHSG, each weighing around 9.5 index points, while BBRI and KLBF each burdened the index by 7.41 and 6.44 index points, respectively.

Investors still tend to lack enthusiasm for reinvesting in the Indonesian stock market. The reason is the deteriorating global market sentiment, which exacerbates the psychological aspects of the market.

IHSG is not the only exchange in the Asia-Pacific region that has fallen. Noted is the Nikkei 225 Index in Japan, which closed down 1.34% to 27,104.3, Hang Seng Hong Kong weakened 0.51% to 20,423.84, Shanghai Composite China corrected 0.41% to 3,291.15, and Straits Times Singapore trimmed 0.21% to 3,300.04.

Next, the ASX 200 in Australia closed depreciated 0.3% to 7,314.5, and the KOSPI in South Korea collapsed 1.68% to 2,417.68.

Meanwhile, the rupiah weakened again against the US dollar as market participants await the release of the Federal Reserve’s monetary policy meeting minutes (The Fed) early Thursday and the inflation version of personal consumption expenditure (PCE).

According to Refinitiv data, the rupiah briefly touched IDR 15,228/US$, before ending trading at IDR 15,200/US$, down 0.1% in the spot market.

The main Wall Street index fell in unison after the release of the Federal Reserve’s meeting minutes, signaling that there would be an interest rate hike to curb inflation. On Wednesday’s trading (22/2/2023), the Dow Jones index fell 0.26% to 33,045.09. Meanwhile, the S&P500 index fell 0.16% to 3,991.05, and the Nasdaq fell 0.13% to 11,507.07.

The Fed’s meeting minutes showed that inflation remained “well above” the central bank’s 2% target, adding that the labor market was still “very tight, contributing to continued upward pressure on wages and prices.”

Fed officials also noted that “inflation data received over the past three months have shown a welcome decrease in the monthly price increase rate, but emphasized that more evidence of progress in the broader price range would be needed to be confident that inflation is on a sustained downward path,” according to the minutes.

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