Jakarta. Indonesian stocks opened 32 points or 0.62% higher at 5,310 on Wednesday before retreating, with the Jakarta Composite Index (JCI) fluctuating between 5,287 and 5,326 in early trading as investors weighed the Bank Indonesia (BI) rate decision against persistent inflation and rupiah pressures.

RTI data showed 1.56 billion shares had changed hands in early trading, with a total transaction value of Rp 1.11 trillion ($61.76 million) and 91,076 transactions. A total of 341 stocks advanced, 144 declined and 211 remained unchanged.

Phintraco Sekuritas said investors were closely watching the outcome of BI's Board of Governors Meeting, with market consensus pointing to a 25-basis-point increase in the BI rate to 6%.

The central bank's decision comes after the JCI surged 5.65% on Tuesday, recovering from an opening decline to 4,980 as investors welcomed exchange authorities' efforts to address concerns over Indonesia's compliance with MSCI standards. However, foreign investors remained net sellers, recording net outflows of Rp 2.21 trillion across all markets.

“The JCI rebounded after the market responded positively to measures taken by the exchange authorities to meet MSCI standards,” Phintraco Sekuritas wrote in its Wednesday research note.

The brokerage said expectations of a rate hike were driven by mounting inflationary pressures, continued rupiah depreciation and preparations ahead of the US Federal Reserve's policy meeting next week.

“Bank Indonesia is monitoring food inflation, which has reached 5% year-on-year, as it could erode people's purchasing power and increase the risk of broader inflation,” Phintraco Sekuritas said.

BI's decision is expected to influence the rupiah, bond market and stocks. A rate increase could help support rupiah stability but also weigh on equities and bond prices as higher borrowing costs become a greater concern.

“Investors will look for signals from Bank Indonesia on the future direction of monetary policy, particularly how it balances exchange-rate stability with support for economic growth,” the brokerage said.

Kiwoom Sekuritas Indonesia said global sentiment remained cautious as investors assessed technology stock valuations, the sustainability of artificial intelligence investment and the economic growth outlook.

Most US stocks advanced on Tuesday, supported by strong earnings reports from Equifax, Hasbro and other companies, while easing oil prices helped improve sentiment. The S&P 500 rose 0.3%, while the Dow Jones Industrial Average gained 529 points, or 1%. The Nasdaq Composite slipped less than 0.1% as shares in the artificial intelligence sector experienced further swings.

Brent crude futures fell 0.7% to $108.79 per barrel after erasing an earlier gain. Prices had approached $112 earlier in the session, nearing their highest levels since the war with Iran began in late February.

The decline could ease inflationary pressures if sustained. Brent has fluctuated between $97 and $112 per barrel this month amid uncertainty over when the energy industry will return to normal operations.

Across regional markets, Japan's Nikkei 225 gained 1.17% and South Korea's Kospi jumped 3.96% as of 9:53 a.m. Jakarta time. Hong Kong's Hang Seng Index slipped 0.21%, while the Shanghai Composite Index fell 0.27%.

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