Jakarta. Indonesia's benchmark stock index tumbled nearly 2% on Wednesday as escalating tensions in the Middle East and fresh concerns over Indonesia's capital market status prompted broad-based selling.

Jakarta Composite Index (JCI) dropped 113 points, or 1.89%, to close at 5,873 after trading between 5,872 and 5,984. Market turnover reached Rp 10.3 trillion ($571.28 million) from 21.76 billion shares traded across more than 1.9 million transactions. Losers outnumbered gainers 482 to 191, while 116 stocks were unchanged.

Pilarmas Investindo Sekuritas said the market was pressured by a combination of external and domestic factors.

Globally, investor sentiment deteriorated as tensions between the United States and Iran intensified following fresh US airstrikes on Iran in response to attacks on several vessels in the Strait of Hormuz.

"The situation has become increasingly tense after Washington revoked the waiver that had previously allowed Iran to sell crude oil to global markets," Pilarmas wrote in its research note on Wednesday.

The brokerage said the escalation had driven global oil prices sharply higher, raising concerns over renewed inflationary pressures and reinforcing expectations that interest rates could remain elevated for longer.

Brent crude surged 5.4% to above $78 a barrel, while US benchmark crude climbed 5.8% to $74.55 after US President Donald Trump declared that the interim agreement with Iran was "over," although he said talks would be allowed to continue.

"For me, I think it's over," Trump said when asked about the status of the ceasefire. "It's just a waste of time dealing with them," he said on the sidelines of the NATO summit in Ankara, Turkey.

Domestically, Pilarmas pointed to concerns after S&P Dow Jones Indices (S&P DJI) placed Indonesia on a watchlist for a possible market classification review in 2027.

S&P DJI said it would continue monitoring the transparency of share ownership in Indonesia following the Indonesia Stock Exchange's new disclosure guidelines. Failure to address the issues under review could result in Indonesia being downgraded from an emerging market to a frontier market.

"The possibility of a downgrade has added to investor concerns, especially as MSCI had previously raised issues regarding transparency and Indonesia's capital market structure," Pilarmas said.

Regional markets were mixed as investors also continued reassessing lofty valuations in artificial intelligence-related stocks. Japan's Nikkei 225 fell 2.1%, while South Korea's Kospi slumped 5.4% amid heavy selling in major technology names, including Samsung Electronics and SK Hynix. Hong Kong's Hang Seng rose 3%, while Shanghai's Composite Index slipped 0.5%.

On Wall Street overnight, AI-related stocks extended their decline, dragging the Nasdaq Composite down 1.2%. The S&P 500 lost 0.4%, while the Dow Jones Industrial Average edged 0.2% lower.