The Indonesia Stock Exchange Composite Index (IHSG) experienced a marginal decline on Thursday, October 24, 2024, dropping 8.89 points or 0.11% to 7,778.66. The dip also extended to the LQ45 index, which tracks Indonesia’s most liquid and capitalized stocks, with the index falling 1.80 points or 0.19%, reaching 952.94. The decline was indicative of the broader global market anxiety ahead of the impending U.S. presidential election, an event that has cast a long shadow over financial markets worldwide.
The Head of Research Retail at BNI Sekuritas, Fanny Suherman, noted that the IHSG’s drop was anticipated due to the cautious stance adopted by investors in the run-up to the U.S. election. Suherman explained that while the Indonesian market had been on an upward trajectory since October 11, 2024, this recent pullback was not unexpected. A minor correction was likely after the recent rally, especially as global investors await more clarity on potential economic shifts post-election. The uncertainty surrounding future U.S. economic policies, trade agreements, and regulatory frameworks has prompted a “wait and see” approach, not only in the U.S. but also in emerging markets like Indonesia.
International developments are also contributing to the broader market uncertainty. On Tuesday, October 22, 2024, the International Monetary Fund (IMF) issued updated growth projections for 2024. While the IMF raised its forecasts for the United States, Brazil, and the United Kingdom, it lowered its expectations for key Asian economies, including China and Japan, as well as the Eurozone. This divergence between Western economies and major Asian markets has further complicated the global economic landscape, leaving investors cautious as they assess the implications for global trade and financial flows.
In China, the government’s recent announcement of a 2 trillion yuan bond issuance to stabilize the economy has provided some support to the domestic stock market. This issuance is seen as a critical measure to provide liquidity and stabilize growth, following concerns over the country’s post-pandemic economic recovery. While investors initially reacted positively, doubts linger about the long-term sustainability of China’s economic momentum, given the structural challenges it faces, including high debt levels and slower growth.
On the other side of the world, U.S. markets have faced headwinds, with Wall Street closing lower on Wednesday, October 23. The decline was largely driven by a surge in U.S. Treasury yields, which saw the benchmark 10-year yield rise to its highest level in three months. The spike in yields has heightened concerns among investors about rising borrowing costs and tighter financial conditions, putting pressure on the stock market, particularly in the tech and large-cap sectors. Corporate earnings reports from leading companies, including McDonald’s and Coca-Cola, have also disappointed investors, adding to the downward trend in U.S. equities.
As a result of these factors, the Dow Jones Industrial Average dropped 0.96% to close at 42,514.95, while the S&P 500 fell 0.92% to 5,797.42. The tech-heavy Nasdaq Composite saw a sharper decline, falling 1.60% to 18,276.65. The U.S. presidential election, looming large over the markets, is seen as a critical factor driving this volatility. Investors are bracing for potential shifts in economic and trade policies depending on the election outcome, which could lead to significant changes in market conditions post-election.
The uncertainty stemming from both international developments and domestic concerns has left global markets, including Indonesia, in a state of heightened caution. Investors are increasingly wary of making large moves before they have a clearer understanding of the U.S. election’s potential impact on global financial systems. In Indonesia, this global caution is being mirrored by subdued trading, with market participants awaiting the outcomes of both the U.S. election and other key economic events unfolding around the world.
