Jakarta. Indonesian stocks outperformed most Asian markets on Monday, with the Jakarta Composite Index (JCI) jumping nearly 2% despite mounting geopolitical tensions in the Middle East that continued to weigh on global investor sentiment.

The benchmark index gained 113 points, or 1.92%, to close at 6,037 after trading between 5,898 and 6,037. Trading volume reached 26.3 billion shares worth Rp 12.1 trillion ($669.6 million) across more than 2.7 million transactions. Advancers outnumbered decliners 377 to 250, while 167 stocks were unchanged.

The rally came as most Asian equities weakened on concerns that escalating geopolitical risks could fuel inflation and keep interest rates elevated.

Pilarmas Investindo Sekuritas said global market sentiment has deteriorated following renewed tensions between the United States and Iran. The latest US strikes on Iran and uncertainty surrounding shipping through the Strait of Hormuz have prompted investors to adopt a more cautious stance.

"Tensions in the Middle East and the potential disruption to global energy supplies have pushed oil prices higher, reviving expectations of further interest rate hikes to contain inflation," Pilarmas wrote in a research note on Monday.

The brokerage added that missile exchanges between the two countries over the weekend further heightened investor concerns about the global economic outlook.

Markets are also awaiting key US economic data, particularly inflation figures due later this week, which are expected to provide fresh clues on the Federal Reserve's monetary policy path.

Investors continue to expect the Fed to deliver one more rate hike before year-end. Minutes from the Federal Open Market Committee's June 2026 meeting, released last week, showed that several policymakers still saw a case for raising rates despite ultimately leaving them unchanged.

Pilarmas said investors are also awaiting Federal Reserve Chair Kevin Warsh's first testimony before the US Congress on Tuesday and Wednesday local time, which is expected to offer further guidance on the direction of US interest rates.

Domestically, the brokerage said the JCI's gains remained limited even after the finance minister said the 2026 first-half state budget remained healthy and resilient despite global economic uncertainty.

However, Pilarmas said external headwinds continue to weigh on Indonesia's stock market, while investors remain cautious as foreign fund inflows have yet to recover.

"The market is also watching a corruption case involving senior law enforcement officials, which could affect investor perceptions of governance credibility and the rule of law in Indonesia," the brokerage added.

Across Asia, Japan's Nikkei 225 fell 1.9% to 67,242, while South Korea's Kospi dropped 0.9% to 6,806, its lowest level since early May.

Shares of South Korean memory chipmaker SK Hynix plunged 15.4% in Seoul after surging 13% during their Wall Street debut on Friday. Rival Samsung Electronics also fell sharply, losing 10.7%.

Hong Kong's Hang Seng Index edged up 0.2% to 24,212, while China's Shanghai Composite Index declined 2.1% to 3,913.

On Wall Street, US stocks closed modestly higher on Friday as investors maintained their appetite for artificial intelligence-related shares. The S&P 500 gained 0.4%, the Dow Jones Industrial Average rose 0.3%, and the Nasdaq Composite advanced 0.3%.

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