Jakarta. Indonesia’s benchmark stock index posted its strongest weekly gain in months, buoyed by easing geopolitical tensions in the Middle East, lower oil prices and renewed investor appetite for risk assets across Asia.

The Jakarta Composite Index climbed 7.38% over the week to close at 6,007.6 on Friday, rebounding sharply from 5,594.7 a week earlier. Market capitalization on the Indonesia Stock Exchange surged by Rp 717 trillion ($40 billion) to Rp 10,524 trillion.

Friday’s rally pushed the benchmark back above the psychologically important 6,000 level as investors returned to equities after US President Donald Trump signaled that a peace agreement with Iran could be reached as early as this weekend. The comments eased fears of a broader conflict in the Middle East and triggered a decline in oil prices.

Brent crude fell 3.4% to $87.33 a barrel, extending weekly losses after Trump backed away from threats of military strikes on Iran. Investors viewed the developments as potentially reopening the Strait of Hormuz, a key global oil shipping route whose disruption had fueled inflation concerns worldwide.

Brokerage Pilarmas Investindo Sekuritas said improving global sentiment also lifted Asian markets, with South Korea’s Kospi index surging 4.6% and Japan’s Nikkei 225 advancing 2.8%.

Domestically, investors welcomed plans by Indonesia’s Finance Ministry and the National Nutrition Agency to reassess funding requirements for the government’s flagship Free Nutritious Meals (MBG). The review is seen as an effort to preserve fiscal credibility after concerns over the scale of spending.

The market also digested the World Bank’s latest outlook projecting Indonesia’s economy to grow 5% in 2026, below the government’s official target, amid weaker investment and exports tied to global uncertainty. Growth is expected to strengthen to 5.2% in 2027 and 2028 as reforms gain traction.

Student-led protests in Jakarta demanding lower government spending and the cancellation of several flagship programs were closely watched by investors but concluded peacefully, limiting market disruption.