Jakarta. The Jakarta Composite Index (JCI) plunged 248.46 points (3.4 percent) to 7,059.6 on Monday, reflecting a significant global market correction driven by a sharp decline in Asian stock markets, disappointing U.S. employment data, and rising geopolitical tensions in the Middle East.

Hendra Wardana, Founder of Stocknow.id, attributed the index's decline to several key factors, such as major sell-offs in Japanese and Asia-Pacific stock markets.

"The Nikkei 225 and Topix both dropped over 12 percent, with major blue-chip firms such as Mitsubishi, Mitsui, Sumitomo, and Marubeni experiencing around a 10 percent decline in their stock prices," Hendra told Investor Daily.

The Hang Seng Index in Hong Kong fell 2.2 percent to 16,579.97, while Australia's S&P/ASX 200 decreased 3.7 percent to 7,649.60. The Shanghai Composite Index, somewhat shielded by capital controls, fell 1.5 percent to 2,862.56. South Korea's Kospi plunged 9 percent, with Samsung’s shares dropping 10.3 percent.

Secondly, Hendra said, negative sentiment was exacerbated by weaker-than-expected U.S. labor data, raising concerns about a potential economic recession. This has led to significant declines in the Nasdaq, S&P 500, and Dow Jones in the U.S.

The Labor Department reported that employers added just 114,000 jobs in July—35 percent fewer than anticipated—and the unemployment rate, now at 4.3 percent, is the highest since October 2021.

Lastly, geopolitical tensions, particularly escalating conflicts in the Middle East, have further increased global market uncertainty. Hezbollah's reported drone attack on northern Israel early Monday, which resulted in injuries to two Israeli soldiers and a fire, has heightened fears of a regional conflict.

Despite the JCI's decline, Hendra remains optimistic. He noted that with the index around the psychological level of 7,000, the index is still in a relatively good position. Weak US labor data may lead the Fed to consider future interest rate cuts, which could positively impact stock markets.

"Additionally, with Indonesia's market valuation still considered undervalued, there are potential growth opportunities for investors. Although the index may face short-term pressures, Indonesia's stock market has a positive long-term outlook," Hendra added.

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