Jakarta. Jakarta stocks fell sharply on Thursday as escalating US-Iran tensions, higher oil prices and rising expectations of higher interest rates weighed on investor sentiment.

Jakarta Composite Index (JCI) dropped 1.33%, or 88 points, to 6,589. Trading volume reached 50 billion shares, with turnover totaling Rp 21.5 trillion ($1.23 billion) across more than 2.6 million transactions. A total of 150 stocks rose, 516 fell and 127 were unchanged.

Pilarmas Investindo Sekuritas said the lack of signs that the US-Iran conflict would ease remained a key source of pressure on the market.

Iran has signaled it is prepared for a more intense conflict, while US President Donald Trump has predicted that the war will not end until after the November midterm elections.

The developments have raised concerns over potential disruptions to energy flows through the Strait of Hormuz, Pilarmas said.

“Higher oil prices could then push up inflation through rising energy and production costs, strengthening market expectations of interest rate hikes,” Pilarmas wrote in a research note on Thursday.

Investors were also taking a wait-and-see stance ahead of the release of US inflation data, which is closely watched for clues on the Federal Reserve’s next policy move.

According to CME FedWatch, the probability of a 25-basis-point rate hike stood at around 60.2%.

“Markets are also watching US Producer Price Index (PPI) and Consumer Price Index (CPI) data, which could influence expectations for the next monetary policy decision,” Pilarmas said.

The decline in Jakarta tracked broader losses across Asian markets, which were also weighed down by heightened Middle East tensions and higher oil prices.

Tokyo’s Nikkei fell 0.2%, while Seoul’s Kospi dropped 0.3%. Hong Kong’s Hang Seng Index declined 1.3%, and Shanghai’s SSE Composite Index lost 0.4%.

On Wednesday, the S&P 500 fell 0.5%, while the Dow Jones Industrial Average dropped 0.8% and the Nasdaq Composite gave up 0.6%. All three US indexes were on track for weekly losses.

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