Jakarta. Jakarta Composite Index (JCI) slid sharply on Friday morning, falling 158 points or 1.98% to 7,945, as investor sentiment weakened following Moody’s latest downgrade of Indonesia’s outlook released a day earlier.

In the first ten minutes of trading, the index moved within a range of 7,888 to 7,995. Volume reached 6.46 billion shares, with turnover totaling Rp 3.03 trillion ($179.46 million) across 336,018 transactions. Decliners dominated with 531 stocks falling, compared with 83 gainers and 87 unchanged.

Pilarmas Sekuritas Investindo said the market had already been under pressure from MSCI scrutiny, but Moody’s decision to revise Indonesia’s credit outlook from stable to negative intensified concerns, particularly over policy stability. The brokerage warned that failure to address fiscal pressures, weakening foreign exchange reserves, rising debt risks, and unresolved capital market transparency issues could trigger larger capital outflows. Such developments would weigh heavily on the bond market, as sovereign rating concerns are closely tied to default risk perceptions.

Moody’s also cited ineffective policy communication that could undermine governance quality and policy effectiveness. Pilarmas noted that prolonged deterioration in these areas may erode the credibility of Indonesia’s policy framework, which has long supported solid economic growth, macroeconomic stability, fiscal resilience, and financial market confidence.

Attention has also turned to the state budget deficit. The increase in the deficit ceiling to 3% of GDP raises fiscal risk exposure, with Pilarmas highlighting populist spending programs as a key concern if risks are not properly managed. Over time, this could pressure the broader economy and reshape investor perceptions toward Indonesia’s investment outlook.

Global sentiment added to the downside. Wall Street closed sharply lower on Thursday as technology stocks declined, sending the S&P 500 down 1.2% for its sixth loss in seven sessions since hitting a record high. The Dow Jones Industrial Average dropped 592 points, or 1.2%, while the Nasdaq Composite slid 1.6%.

Labor market signals in the United States further clouded the outlook. Layoff announcements surged to 108,435 last month, the highest since October and the worst January figure since the 2009 Great Recession, according to Challenger, Gray & Christmas. Separate government data showed job openings in December fell to their lowest level in more than five years.

Signs of labor market weakness could push the Federal Reserve toward interest rate cuts to support growth, though such a move risks fueling inflation. Treasury yields declined across maturities in response.

Asian markets followed Wall Street lower on Friday amid concerns that heavy investment in artificial intelligence could strain corporate finances. Japan’s Nikkei fell 0.71% to 53,435, South Korea’s Kospi dropped nearly 3% to 5,013, Hong Kong’s Hang Seng slid 2% to 26,354, and China’s Shanghai Composite lost 0.86% to 4,040.