The Indonesia Stock Exchange Composite Index (IHSG) opened on Thursday, October 24, 2024, with a slight decrease, falling 8.89 points or 0.11% to 7,778.66. The decline was mirrored in the LQ45 index, which tracks Indonesia’s 45 most liquid and capitalized stocks, with the index dropping by 1.80 points or 0.19%, reaching 952.94. The market’s cautious performance was largely attributed to the prevailing global uncertainty surrounding the upcoming U.S. presidential election, a key factor influencing investor sentiment around the world.
Fanny Suherman, Head of Research Retail at BNI Sekuritas, commented on the IHSG’s movement, explaining that the Indonesian stock market had been on an upward trajectory for much of October. However, the market was now experiencing a minor correction as investors grew more hesitant ahead of the U.S. election. Suherman noted that many market participants were adopting a “wait and see” approach, anticipating potential shifts in U.S. economic policy depending on the election outcome. This uncertainty was leading to a more conservative trading environment, not only in Indonesia but across global markets.
Globally, there have been significant economic developments contributing to market movements. On Tuesday, October 22, 2024, the International Monetary Fund (IMF) updated its 2024 economic forecasts, presenting a mixed picture of global growth prospects. The IMF raised its outlook for the United States, Brazil, and the United Kingdom, while lowering its expectations for China, Japan, and the Eurozone. The contrasting trajectories of these major economies are creating an uneven global economic landscape, with implications for trade, investment flows, and financial markets.
In China, the recent rally in its stock market has been a focal point for investors, bolstered by the government’s plan to issue 2 trillion yuan in special government bonds. The bond issuance is seen as a measure to stabilize the financial markets and provide additional liquidity to the economy. While the move has been welcomed by investors, there remain concerns about the longer-term challenges facing China’s economy, including slowing growth and mounting debt levels.
Meanwhile, in the United States, markets have been weighed down by a combination of rising Treasury yields and mixed corporate earnings reports. On Wednesday, October 23, 2024, Wall Street saw a broad sell-off, driven in part by the rising yields on U.S. Treasury bonds. The benchmark 10-year Treasury yield surged to its highest level in three months, raising concerns about higher borrowing costs and tighter financial conditions. These developments have had a particularly negative impact on large-cap and tech stocks, which are sensitive to changes in interest rates.
Adding to the market’s concerns were disappointing earnings reports from several major companies, including McDonald’s and Coca-Cola. The weaker-than-expected results have raised questions about the overall strength of the U.S. economy, further contributing to the downward pressure on stock prices. By the close of trading, the Dow Jones Industrial Average had dropped 0.96% to 42,514.95, the S&P 500 had fallen 0.92% to 5,797.42, and the Nasdaq Composite had declined 1.60% to 18,276.65.
As the U.S. presidential election draws nearer, investors are becoming increasingly cautious. The outcome of the election could have significant implications for U.S. economic policy, trade agreements, and regulatory frameworks. Both major candidates have proposed contrasting approaches to economic management, leading to uncertainty about what the future holds for the U.S. economy and, by extension, the global financial markets.
For Indonesia, the IHSG’s decline reflects the broader uncertainties in global markets. Investors are grappling with a range of issues, from the implications of the U.S. election to the uneven economic recovery seen across major global economies. As a result, the market is likely to remain volatile in the lead-up to the election, with investors closely monitoring developments both at home and abroad.
