Jakarta. Indonesian stocks closed lower on Friday as surging oil prices and a global technology selloff fueled risk aversion, with escalating Middle East tensions stoking concerns over inflation and tighter monetary policy.

Jakarta Composite Index (JCI) fell 49 points, or 0.78%, to 6,266, after trading between 6,227 and 6,268 during the session.

In the opening minute of trading, market volume reached 3.5 billion shares, with turnover of Rp 1.7 trillion ($94.61 million) across more than 224,000 transactions. Decliners outpaced gainers, with 384 stocks falling, 127 advancing, and 171 unchanged.

Phintraco Sekuritas said the continued rise in crude oil prices would remain a negative catalyst for the domestic market.

The brokerage also noted that Indonesia's broad money supply (M2) grew 8.7% year-on-year to Rp 10,432.8 trillion in June, slowing from 10.8% in May.

The expansion was driven by a 9.8% increase in narrow money (M1) and a 6.9% rise in quasi-money, indicating liquidity continued to expand, although at a slower pace than the previous month. Credit growth, however, accelerated to 12.67% year-on-year in June.

Kiwoom Sekuritas Indonesia said liquidity is expected to improve in the short to medium term as foreign capital inflows return and surplus budget funds (SAL) are redeposited into state-owned Himbara banks, supporting stronger M2 growth in the coming months.

"However, the longer-term outlook remains exposed to renewed tightening risks should the Fed adopt a more hawkish stance, geopolitical tensions push oil prices higher, or the government withdraws SAL funds again to strengthen its fiscal capacity," Kiwoom said.

The brokerage also highlighted Indonesia's inaugural Panda Bond issuance in China's financial market, which drew strong demand with a 2.4-times bid-to-cover ratio.

Investor orders reached about CNY 17 billion ($2.51 billion) against an issuance size of CNY 7 billion ($1.03 billion).

"The strong demand reflects investor confidence in Indonesia's fundamentals while broadening the government's access to global funding sources," Kiwoom said. "The successful issuance also provides positive sentiment for the domestic bond market and the rupiah, while potentially strengthening investor confidence in Indonesian financial assets."

Despite that, Kiwoom said global sentiment remained weak as investors questioned whether massive artificial intelligence spending would generate adequate returns. It pointed to Alphabet's decision to raise capital expenditure guidance to $195 billion-$205 billion, while Tesla again reported negative free cash flow.

Meanwhile, crude oil prices climbing above $100 per barrel have strengthened inflation expectations and increased the likelihood of tighter monetary policy.

Geopolitical tensions escalated after the Iran-backed Houthi group attacked two Saudi oil tankers in the Red Sea, further disrupting global oil shipments. Traffic through the Strait of Hormuz has reportedly fallen by around 75%, while President Donald Trump warned that the US would hold Iran accountable if similar attacks occur again.

The risk-off mood sent Wall Street sharply lower overnight. The S&P 500 fell 1.2% to 7,408, the Nasdaq Composite tumbled 2.2% to 25,137, and the Dow Jones Industrial Average lost 1.0% to 51,711.

As of 9 a.m. Jakarta time on Friday, Asian markets were also broadly lower. Japan's Nikkei dropped 2.83%, South Korea's Kospi slid 2.96%, Hong Kong's Hang Seng fell 1.07%, and China's Shanghai Composite edged down 0.44%.

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