Jakarta. Jakarta Composite Index (JCI) rallied 2.28%, or 131 points, to close at 5,875 on Friday as easing geopolitical tensions in the Middle East, growing expectations of a US Federal Reserve rate cut, and optimism over Indonesia's 2027 fiscal framework boosted investor sentiment.

According to RTI Data, trading volume reached 18.14 billion shares, with turnover totaling Rp 10.5 trillion ($584.18 million) across more than 1.3 million transactions. Advancing stocks outnumbered decliners 494 to 154, while 139 stocks were unchanged.

Pilarmas Investindo Sekuritas said the market was encouraged by signs of progress in peace negotiations between the United States and Iran after Qatar reported advances in the talks.

"Although no final agreement has been reached, the development has raised market optimism over stability in the Middle East," Pilarmas wrote in a research note on Friday.

The brokerage also pointed to weaker-than-expected US labor data, which reinforced expectations that the Federal Reserve will hold off on raising interest rates.

US nonfarm payrolls increased by just 57,000 jobs in June, well below market expectations of 110,000. Meanwhile, the unemployment rate fell to 4.2%, better than the consensus forecast of 4.3%.

"The data strengthened speculation that the Fed will delay further interest rate hikes," Pilarmas said.

According to the CME FedWatch Tool, the probability of a September rate hike fell to about 45.6% from 67% before the jobs report was released.

Domestically, investors also welcomed the government's preliminary agreement with the House of Representatives on the 2027 state budget framework.

The government is targeting state revenue at 12.01%-12.40% of gross domestic product (GDP), with tax revenue projected at 10.08%-10.45% of GDP. State spending is set at 13.82%-14.20% of GDP, resulting in an estimated fiscal deficit of 1.8%-2.2% of GDP.

"The fiscal framework reflects the government's commitment to maintaining fiscal discipline while supporting economic growth," Pilarmas said.

Asian markets also ended higher on Friday after the Dow Jones Industrial Average hit another record overnight, supported by gains in several major artificial intelligence-related stocks.

South Korea's Kospi, which had fallen nearly 8% on Thursday, rebounded 5.8% to 8,088. Shares of Samsung Electronics climbed 8.2%, while SK Hynix surged 10.9%.

Japan's Nikkei 225 rose 1.5% to 69,744. Chipmaker Tokyo Electron gained 0.4%, while memory chip producer Kioxia jumped 9.2%.

Hong Kong's Hang Seng Index advanced 1.3% to 23,345, while China's Shanghai Composite Index added 0.4% to 4,043.

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