Jakarta. Indonesian stocks rose on Friday, tracking Wall Street’s tech-led rally and improving global sentiment as investors looked past the Federal Reserve’s latest decision, while a domestic debate over raising the budget deficit ceiling kept fiscal risks in focus.

Jakarta Composite Index (JCI) climbed 50 points, or 0.76% to 6,512 in early trading, moving between 6,490 and 6,521.

Trading volume reached 1.52 billion shares, with turnover of Rp 848.1 billion ($47.8 million) across more than 118,000 transactions. A total of 250 stocks advanced, 193 declined and 241 remained unchanged.

Globally, market sentiment improved as investors shifted their attention away from concerns surrounding the Federal Reserve’s decision and toward falling long-term bond yields, Kiwoom Sekuritas Indonesia said on Friday.

A rally in technology stocks also supported sentiment, signaling that the sector was once again becoming a key market driver.

“Investors also considered the previously anticipated rate hike to have reduced short-term uncertainty over monetary policy direction,” Kiwoom said.

Pluang Research offered a deeper explanation for the decline in US Treasury yields following the Fed’s rate hike, saying investors had increasingly questioned the central bank’s commitment to fighting inflation amid political pressure from US President Donald Trump to lower interest rates.

“Throughout the summer, the market began to doubt the Fed’s resolve in fighting inflation. The concern was not that the Fed would be too hawkish, but rather that it would give in to President Trump’s political pressure to cut interest rates,” Pluang Research said in a report on Friday.

The Fed’s decision to raise rates, coupled with Chair Kevin Warsh’s characterization of the move as “removing one dose of accommodation,” helped ease those concerns, according to the research firm.

“The market read this as concrete evidence that the central bank’s independence remained intact. That alone was enough to convince bond investors to return to buying, breaking an eight-day streak of rising yields,” Pluang said.

It described the move as a classic “sell the rumor, buy the fact” reaction, driven by confidence in monetary policy credibility rather than simply the rate decision itself.

Wall Street closed higher on Thursday, posting its strongest daily performance in more than a month as falling oil prices and a technology stock rally lifted equities amid strength in US Treasuries.

The S&P 500 gained 1.14%, while the Nasdaq Composite advanced 1.69%. The Dow Jones Industrial Average rose 0.61%.

Regional markets also traded higher on Friday morning. As of 9 a.m. Jakarta time, Japan’s Nikkei 225 had gained 0.54%, South Korea’s Kospi climbed 2%, Hong Kong’s Hang Seng Index advanced 0.84% and China’s Shanghai Composite Index edged up 0.51%.

Domestically, investors are also watching Parliament’s review of the State Finance Law, which includes discussions on whether Indonesia should reconsider its 3% budget deficit ceiling, according to Phintraco Sekuritas.

The government currently operates under Law No. 17/2003 on State Finance, which limits the state budget deficit to a maximum of 3% of gross domestic product (GDP).

“If the deficit ceiling is indeed raised from the current 3% of GDP, a potential positive impact would be greater flexibility in financing government programs,” Phintraco Sekuritas said.

However, the brokerage warned that a higher deficit ceiling could increase government debt and interest payments.

Additional borrowing could also affect the absorption of government securities (SBN) and corporate bonds issued by private companies, it said.

“Furthermore, global investors and international rating agencies could perceive Indonesia’s fiscal discipline as weakening, potentially triggering credit rating downgrades, capital outflows and rupiah depreciation,” Phintraco Sekuritas said.

Indonesia previously allowed its budget deficit to exceed the 3% ceiling during the COVID-19 pandemic in 2020–2022, when exceptional circumstances prompted temporary fiscal flexibility.

The average fiscal deficit among ASEAN countries is projected to range between 3% and 4.2% of GDP in 2026, Phintraco Sekuritas said.

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