Jakarta, IDN Times – The Jakarta Composite Index (JCI) experienced a volatile start on Thursday (May 21, 2026). After opening at 6,366.48 and briefly climbing to a daily high of 6,378.81, the index sharply retreated into negative territory within minutes of the opening bell.
Mirae Asset Sekuritas Indonesia Senior Technical Analyst, Nafan Aji Gusta, noted that the JCI initially attempted a rebound due to oversold conditions identified by the RSI indicator. “Technically, the market sought a recovery after hitting the wave 5/A target. However, this target remains valid as long as the Stochastic K_D indicator signals downward momentum, further reinforced by declining trading volumes,” Nafan explained.
1. Bank Indonesia’s Surprise Rate Hike
A primary driver of the market’s unease was Bank Indonesia’s (BI) unexpected monetary policy shift. In a move more aggressive than market consensus, the central bank hiked its benchmark interest rate by 50 basis points to 5.25 percent. Analysts had previously anticipated a more modest increase to 5 percent.
According to Nafan, this decisive action was intended to curb the intense downward pressure on the Rupiah. The policy appears to be working, as the currency was observed strengthening by 0.29 percent to the level of Rp17,653.5 per US dollar.
2. Market Clarity Following President Prabowo’s Address
On a more positive note, investors found a degree of certainty following President Prabowo’s address during the House of Representatives (DPR) plenary session. The President outlined a realistic economic growth target, projecting a range of 5.8 percent to 6.5 percent for the upcoming fiscal year.
“Providing clarity on macroeconomic assumptions, such as government bond yield targets, helps reassure the market and effectively mitigates volatility risks,” Nafan added.
3. Global Sentiments and Geopolitical Dynamics
On the global front, US-Iran geopolitical tensions remain a focal point. Market sentiment shifted after President Trump announced that the United States is in the final stages of peace talks with Iran, a development that caused WTI crude oil prices to plummet by over 4 percent.
Meanwhile, the minutes from the Federal Reserve’s April meeting revealed that a majority of FOMC participants believe further rate hikes could be appropriate if inflation remains consistently above the Fed’s 2 percent target. This report comes during a period of leadership transition at the Fed, following the conclusion of Jerome Powell’s term on May 15, 2026, with Trump’s nominee, Kevin Warsh, expected to be inaugurated soon.
“According to the CME FedWatch tool, the market generally expects the Fed to maintain stable rates throughout the year. However, expectations for rate hikes have been trending upward for the period between July and December 2026,” Nafan concluded.
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Summary
The Jakarta Composite Index (JCI) experienced volatility on May 21, 2026, driven primarily by Bank Indonesia’s surprise decision to hike interest rates by 50 basis points to 5.25 percent. While this aggressive move aimed to strengthen the Rupiah, it initially placed downward pressure on the market. However, investors found some stability following President Prabowo’s address, which provided much-needed clarity by setting realistic economic growth targets between 5.8 and 6.5 percent.
Global sentiments also influenced market performance, notably due to easing US-Iran geopolitical tensions and fluctuating crude oil prices. Furthermore, the Federal Reserve’s latest meeting minutes suggested potential future rate hikes should inflation persist, contributing to ongoing market caution. Analysts continue to monitor these macroeconomic shifts and their impact on future investment trends as the market navigates this transition period.
