Jakarta. Indonesia’s benchmark index slipped on Tuesday as investors pulled back amid escalating Middle East tensions and mounting fiscal concerns at home, with sentiment turning cautious despite signs of a potential short-term rebound.

The Jakarta Composite Index (JCI) fell 0.48%, or 34 points, to close at 7,072. Trading remained active, with volume reaching 31.8 billion shares and turnover at Rp 17.4 trillion ($1 billion) across more than 2.1 million transactions. Decliners outpaced gainers, with 350 stocks falling against 339 advancing, while 129 were unchanged.

Pilarmas Investindo Sekuritas said global markets remain overshadowed by geopolitical uncertainty, particularly surrounding diplomatic developments between the United States and Iran. US President Donald Trump is reportedly reviewing Tehran’s latest proposal to ease the prolonged conflict.

“However, Washington’s firm stance in maintaining several ‘red lines’, including preventing Iran from developing nuclear weapons, has prompted investors to adopt a wait-and-see approach,” Pilarmas wrote in a Tuesday research note.

The brokerage added that tensions have also disrupted global energy distribution. The Strait of Hormuz, which remains effectively closed, has heightened concerns over global oil supply, fueling volatility across financial markets, including equities.

Domestically, pressure on the JCI was compounded by rising fiscal concerns. Reports of a significant drawdown in the government’s budget  excess (SAL) have unsettled investors, raising questions over Indonesia’s fiscal resilience.

“This condition has even sparked speculation over potential risks to financial stability if not properly anticipated,” Pilarmas added.

Still, the decline was relatively limited. Pilarmas noted that the market has entered oversold territory from a technical perspective, leaving room for a near-term rebound.

Among top gainers, Kokoh Exa Nusantara jumped 34.82%, PP Presisi surged 34.75%, Sinergi Inti rose 34.75%, and Langgeng Makmur gained 34.67%. On the losing side, Jaya Agra Wattie fell 14.56%, Mitrabahtera slid 12.81%, Pradiksi Gunata dropped 11.38%, and Prasidha declined 11.32%.

Across Asia, shares broadly retreated while oil prices climbed, as diplomatic efforts to end the Iran conflict appeared to stall. Despite a fragile ceasefire, the Strait of Hormuz remains effectively shut, disrupting a critical route for global oil shipments, particularly for energy-dependent economies such as Japan.

Japan’s Nikkei 225 fell 1% to 59,917 after the central bank held its benchmark interest rate at 0.75%. The Bank of Japan said economic growth remains moderate but is expected to slow as rising crude oil prices weigh on activity. The decision, passed by a 6-3 vote, reflects ongoing debate over gradually tightening policy after years of ultra-low rates.

“There are various risks to the outlook,” the central bank said. “For the time being it is necessary to pay particular attention to the impact of the future course of the situation in the Middle East.”

Major central banks, including the US Federal Reserve, European Central Bank, and Bank of England, are also set to announce interest rate decisions this week.

On Wall Street, the S&P 500 edged up 0.1% to a fresh record high of 7,137, marking a slowdown after weeks of strong gains driven by solid corporate earnings and optimism that the economy can avoid a worst-case scenario despite the ongoing conflict. The Dow Jones Industrial Average slipped 0.1% to 49,167, while the Nasdaq Composite rose 0.2%.

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