Jakarta. The Indonesia Stock Exchange (IDX) faced a challenging week, with market capitalization declining by 2.67 percent to Rp 12,531 trillion ($799.68 billion) from Rp 12,875 trillion the previous week. The Jakarta Composite Index (JCI) also saw a significant drop of 2.61 percent, closing at 7,496.09, compared to 7,696.92 in the prior week.

Global uncertainties, especially the escalating conflict in the Middle East, weighed heavily on investor sentiment. Iran's missile attacks on Israel, in retaliation for Israel’s military campaign against Hezbollah in Lebanon, sparked fears of further conflict in the region. According to NH Korindo Sekuritas Indonesia, this geopolitical tension began to shake investor confidence, leading to foreign outflows from the Indonesian market.

On Thursday, the IDX saw foreign net sales of Rp 916.5 billion in the regular market, reducing the year-to-date foreign net buy position to just Rp 216.6 billion. Oil prices surged in response to fears that the Middle East conflict could disrupt global oil supplies, with Brent crude rising 0.6 percent to $78.05 per barrel, bringing its weekly gain to 9.1 percent. US crude also increased 0.9 percent to $74.38 per barrel.

In domestic data, Indonesia’s Nikkei Manufacturing PMI for September slightly improved to 49.2 from 48.9 in August, but the figure still indicates contraction. Meanwhile, inflation remained contained at 1.84 percent year-on-year in September, down from 2.12 percent in August. However, the country experienced deflation for the fifth time this year, with a 0.12 percent drop in September—the deepest deflation in five years—raising concerns over declining consumer purchasing power.

The sluggish performance of the rupiah, which weakened to Rp 15,415 per U.S. dollar, is expected to continue. Analysts predict the currency may soon approach the Rp 15,560 level, driven by capital outflows and continued market turbulence.

Elsewhere in Asia, Hong Kong’s Hang Seng index surged 2.8 percent, capping a remarkable 10 percent rise over the week amid growing optimism fueled by new government measures to stimulate China’s economy.

US stocks also rallied at the end of the week, with the S&P 500, Dow Jones, and Nasdaq all gaining on positive US jobs data, providing some optimism for global markets. 

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