Jakarta. Indonesia's stock market ended the week on a sour note as the Jakarta Composite Index (JCI) fell 1.93 percent, or 132.96 points, closing at 6,742.576 on Friday. Energy, raw materials, infrastructure, and primary consumer goods sectors led the losses, with energy stocks plunging over 6 percent.

According to NH Korindo Sekuritas Indonesia, the ongoing global trade war, particularly involving the US, has made it challenging for foreign investors to maintain or bring fresh capital into Indonesia without significant political or economic shifts.

President Prabowo Subianto has ordered central and regional governments to slash spending by Rp 306.69 trillion ($18.9 billion) this year to fund his flagship program, which provides free nutritious meals to children and expectant mothers. The Public Works Ministry will bear the brunt of the cuts, losing Rp 81 trillion, equivalent to 80 percent of its budget, which could halt some infrastructure projects. The Indonesian Hotel and Restaurant Association (PHRI) has expressed concern that reduced government spending, particularly on travel, could hurt the hospitality industry.

Meanwhile, the rupiah strengthened against the US dollar, closing at Rp 16,282, a gain of 58.5 points, as investors anticipated US employment data. Bank Indonesia (BI) reported an increase in foreign exchange reserves to $156.1 billion in January, bolstered by global bond issuance and tax revenues. BI expressed confidence that these reserves would ensure external sector resilience and macroeconomic stability amid global market uncertainties.

Manufacturing Shows Resilience, but Challenges Loom

Indonesia's Manufacturing Purchasing Managers’ Index (PMI) rose to 51.9 in January, its highest level since May 2024, driven by strong domestic and export demand ahead of Ramadan and Eid. However, industry leaders warned of potential slowdowns post-Eid due to seasonal factors, exchange rate volatility, and rising raw material costs.

Adhi S. Lukman of the Indonesia Employers Association (Apindo) said while key manufacturing sectors like food, beverages, and textiles are expanding, challenges such as declining consumer purchasing power and limited raw material availability could weigh on future growth. He called for technology adoption and stronger industrial ecosystems to sustain manufacturing's contribution to GDP.

Regional and Global Market Trends

Across Asia, markets delivered mixed performances. China's tech-heavy Hang Seng Index rose 0.91 percent, buoyed by gains in Tencent and Alibaba, while Japan’s Nikkei 225 slipped 0.72 percent on expectations of further rate hikes. In currency markets, the Japanese yen strengthened, putting pressure on export-reliant industries.

In Europe, trading opened with slight fluctuations as investors awaited US jobs data. On Wall Street, Thursday's mixed performance reflected ongoing uncertainty over the impact of recent US tariffs and global trade tensions.

Oil prices ticked upward, with US crude rising to $71.13 per barrel and Brent crude at $74.95, supported by steady demand.