The Indonesia Stock Exchange Composite Index (IHSG) opened Thursday, October 24, 2024, with a decline of 8.89 points or 0.11%, settling at 7,778.66. Simultaneously, the LQ45 index, which tracks the top 45 blue-chip stocks, also weakened by 1.80 points or 0.19%, closing at 952.94. The market sentiment reflected a cautious tone as investors awaited further developments from the upcoming U.S. presidential election, a key factor influencing global market movements.
Fanny Suherman, Head of Research at BNI Sekuritas Retail, explained that the IHSG’s slight dip was a result of the market’s anticipatory stance ahead of the U.S. election, an event that could have widespread repercussions across global financial markets. Suherman noted that after a consistent upward trend since October 11, 2024, the index was showing signs of a minor correction. This adjustment was largely seen as a natural response to the ongoing period of uncertainty, where market participants preferred to adopt a “wait and see” approach before making significant moves.
Beyond Indonesia, international economic factors were also playing a role in shaping the direction of the IHSG. On Tuesday, October 22, 2024, the International Monetary Fund (IMF) revised its economic growth forecasts for several major economies. While the outlook for the United States, Brazil, and the United Kingdom was raised, projections for China, Japan, and the Eurozone were lowered. These mixed signals from the global economy added another layer of complexity to investor decision-making, as they tried to balance positive momentum in some regions against ongoing challenges in others.
In Asia, particular attention was focused on China, where recent stock market rallies have caught the eye of investors. This was largely driven by the Chinese government’s plans to issue a 2 trillion yuan special government bond aimed at stabilizing the country’s financial markets. The move, seen as an effort to boost liquidity and support economic growth, was viewed favorably by some investors, though questions about the sustainability of China’s economic recovery persisted.
Meanwhile, U.S. markets presented a more sobering picture. Wall Street closed in the red on the back of rising U.S. Treasury yields, which put pressure on large-cap stocks, particularly in the tech-heavy sectors. Concerns about the Federal Reserve’s stance on interest rates also weighed on investor sentiment. While market participants had been hopeful for a rate cut, recent economic data suggested that such a move might be delayed, leading to renewed uncertainty.
Adding to the downward pressure were disappointing earnings reports from corporate giants such as McDonald’s and Coca-Cola, which further dampened investor enthusiasm. As a result, key U.S. indices experienced significant losses. The Dow Jones Industrial Average fell 0.96%, closing at 42,514.95. Similarly, the S&P 500 dropped 0.92% to 5,797.42, while the Nasdaq Composite, heavily influenced by tech stocks, saw a steeper decline of 1.60%, ending the session at 18,276.65.
The primary driver behind the selloff in U.S. equities was the surge in yields on 10-year U.S. Treasury bonds, which reached their highest level in three months. This increase came as investors priced in the potential effects of the upcoming U.S. presidential election. With both candidates presenting differing economic policies, the uncertainty surrounding the election outcome added to the overall risk aversion seen in global markets, including in Indonesia.
In this broader context, the IHSG’s slight downturn can be understood as part of a larger trend of cautious trading across global markets. Investors in Indonesia, like their counterparts around the world, are navigating a complex landscape shaped by a mix of economic forecasts, corporate earnings, and political developments. As the U.S. election approaches, the potential for volatility remains high, with global markets poised to react to any significant developments in the lead-up to the vote.
For Indonesian investors, the focus will remain on both domestic and international factors as they try to gauge the impact of these global shifts on the local market. While the IHSG has shown resilience in recent weeks, the coming days could see continued volatility as the U.S. election draws closer and other global events, such as China’s bond issuance and the IMF’s revised forecasts, continue to unfold.
