Israel Suspected of Responding to Iran, JCI Almost Touches 7,000

This situation was influenced by the fall in shares of 466 issuers. Meanwhile, only 97 stocks continued to grow.

RTI BUSINESS

JCI movement in the last week to Friday (19/4/2024).

JAKARTA, KOMPAS — The Composite Stock Price Index or IHSG suddenly fell to 7,000 at the start of stock exchange trading, Friday (19/4/2024). Analysts say this happened because of air strikes in Iran territory which were allegedly carried out by the Israel military.

At 10.00, the IHSG collapsed by 1.6 percent to a level of 7,050 from the opening level of 7,166. This situation was influenced by the decline of shares from 466 issuers. Meanwhile, only 97 shares remained to grow.

Based on the emitters sector, as monitored from the Ajaib application, all stocks are showing negative growth. The technology, transportation, and infrastructure sectors contracted by 93 percent, 34 percent, and 36 percent, respectively.

"We estimate that this is due to the re-heating of the geopolitical conflict in the Middle East, where it is known that Israel is suspected of attacking Iran. "Then there was a weakening of the rupiah exchange rate against the US dollar as a result of this action," said MNC Sekuritas analyst, Herditya Wicaksana, to Kompas, Friday (19/4/2024).

Also read: Explosions in Iran, No Reports of Missile Attacks Yet

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Military exercises are also intended to show that the Iranian Armed Forces can defend the country's sensitive and vital centers. Several major nuclear and military sites in Iran are located in the central part of the country, including the Natanz nuclear facility in Isfahan, which has been targeted for sabotage attacks since last year, which Iran has accused Israel of carrying out.

Quoting The Associated Press, Iran recovered the drone on Friday morning after reports of an explosion near its main air base in the city of Isfahan. Reporting from the IRNA news agency, the Iranian military then shot down the device.

It is still unclear whether the country is under attack. However, tensions remain high following Iran's unprecedented missile and drone attacks on Israel. The Israeli military did not immediately respond to media requests for comment.

The lowest position of the IHSG in the first four months of 2024, on the other hand, can make export-oriented issuer's stocks grow positively.

Isfahan is home to sites related to Iran's nuclear program, which have repeatedly been targeted by Israeli attacks. However, the government television portrays all locations in the region as completely safe.

Also read: IHSG and Rupiah Slowly Strengthen

This situation suddenly caused world oil prices, the US dollar and gold to soar. The price of West Texas Intermediate (WTI) oil futures rose 2.5 percent to 84 US dollars per barrel. The price of gold rose 0.3 percent to 2,389 US dollars per troy ouce. The strengthening of the US dollar also occurred, causing the rupiah exchange rate to reach the level of Rp. 16,200.

The lowest position of the Indonesian Stock Exchange (IHSG) in the first four months of 2024, on the other hand, can make the shares of export-oriented issuers grow positively. "Commodity-based issuers in the IHSG can strengthen their movements due to the rise in world commodity prices such as gold and crude oil," he added.

Herditya reminds stock traders to be cautious if the Jakarta Composite Index (IHSG) breaks through 7,045, which could cause it to correct to 6,983. "Although there is a chance, it is not very likely to happen by the end of today's trading session," he concluded.

KOMPAS/PRIYOMBODO

Officials inspect US dollars exchanged at PT Valuta Artha Mas in Jakarta on Tuesday (16/4/2024). The officials said that the number of people selling US dollars has increased due to the strengthening of its exchange rate against the rupiah.

Associate Director of Research and Investment at Pilarmas Investindo Sekuritas, Maximilianus Nico Demus, also expressed the same reason for the collapse of the domestic stock index. "Although there has been no confirmation from Israel, the possibility of tension in the Middle East will increase," he said when contacted separately.

The policy discourse factor interest rates is also said to be the reason. A meeting of officials from the United States central bank, The Federal Reserve, Thursday (18/4/2024), stated that a cut in interest rates might not occur until the end of 2024. This takes into account macroeconomic developments in the country which other countries could follow, including Indonesia.

This discourse has caused the market's confidence in the interest rate cut in June 2024 to decline. Previously, this news had caused stock indexes and bond prices to grow positively at the closing of the bourse yesterday.

"All of this is a new conviction, as it is capable of changing the perceptions and expectations of market players and investors regarding the hope for The Fed to cut interest rates this year," said Maximilianus.

Also read: World Oil Prices Towards a New Balance