Jakarta. Indonesia’s benchmark Jakarta Composite Index (JCI) fell 0.55% or 34 points on Wednesday as investors adopted a cautious stance ahead of a series of key events, including interest rate decisions by the US Federal Reserve and Bank Indonesia, as well as MSCI’s upcoming market review.

The index traded within a range of 6,179 to 6,377. Total trading volume reached 33.3 billion shares, with turnover amounting to Rp 23.7 trillion ($1.33 billion) across more than 2.3 million transactions. Decliners outnumbered gainers, with 391 stocks falling, 288 advancing, and 137 remaining unchanged.

Pilarmas Investindo Sekuritas said that investors are also closely monitoring developments surrounding a temporary peace agreement between the United States and Iran, which is scheduled to be signed in Switzerland on Friday.

If implemented, the agreement is expected to reopen energy distribution routes through the Strait of Hormuz and restore Iranian oil exports.

"The move could potentially lower global energy prices and ease market concerns over inflation and prolonged high interest rates," Pilarmas wrote in a research note on Wednesday.

However, the brokerage said markets are still waiting for clarity on how the agreement will be implemented, including the pace of oil distribution normalization and its broader impact on the global economy.

"Markets are currently assessing the durability of the US-Iran peace agreement and the timeline for restoring energy shipments through the Strait of Hormuz. While easing geopolitical tensions is a positive development, investors remain in wait-and-see mode," Pilarmas said.

Beyond geopolitical developments, investor attention is focused on the Federal Reserve's policy meeting, the first under Fed Chair Kevin Warsh.

"Market participants expect the Fed to keep its benchmark interest rate unchanged. However, investors are looking for guidance on the inflation outlook, the direction of monetary policy, and the possibility of rate adjustments through the end of the year," Pilarmas said.

Domestically, investors are also awaiting Bank Indonesia's interest rate decision, which Pilarmas said will be a key determinant of the direction of Indonesian financial assets.

The brokerage added that investor caution has intensified ahead of FTSE's rebalancing and MSCI's announcements on June 18 and June 23, respectively.

"Both the Global Market Accessibility Review and the Annual Market Classification Review will determine Indonesia's status as an emerging market and could serve as key catalysts for the JCI's recovery," Pilarmas said.

Despite near-term market pressure, Pilarmas noted that several positive factors continue to support Indonesia's economic outlook. A de-escalation in US-Iran tensions could help lower global energy prices and ease inflationary pressures.

Meanwhile, the government's plan to review and adjust funding for the Free Nutritious Meals program, known locally as MBG, could create healthier fiscal space within the state budget.

"Such measures could help maintain fiscal stability and reduce pressure on the budget deficit over the medium term," Pilarmas said.

Elsewhere in the region, Asian markets were mostly higher on Wednesday as investors tracked developments surrounding the US-Iran agreement.

Brent crude, the global oil benchmark, fell 1% to $78.19 per barrel in early trading after plunging more than 5% a day earlier, although prices remained above the roughly $70 level recorded before the conflict began in late February. US benchmark West Texas Intermediate crude declined 1.1% to $75.21 per barrel.

Japan's Nikkei 225 rose 0.7% to 69,902 after briefly surpassing the 70,000 mark for a second consecutive session, supported by a 17% year-on-year increase in May exports driven by strong demand for high-tech products.

South Korea's Kospi advanced 1.6% to 8,864, extending record highs as technology stocks rallied despite a recent sell-off in artificial intelligence-related shares on Wall Street.

Hong Kong's Hang Seng Index fell 0.9% to 24,280, while China's Shanghai Composite Index gained 0.4% to 4,108.

Add as a preferred source on Google +