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Causes JCI Drops Due to Inflation and Fed Interest Rates Rise

The reason why the JCI fell in July 2022. The surge in inflation and data on the increase in the number of Covid-19 were the reasons.

This week the Composite Stock Price Index or JCI experienced a correction at 1.33%.

Entered at the level of 6,992.23, even weakened to 2% during trading in the first session.

The JCI correction was due to US inflation.

In addition, it is also affected by the presence ahead of the Fed’s meeting.

There are many things that affect this condition occurs.

So that the cause of the decline in IHSG is increasingly visible.

Some time ago the decline in the JCI also occurred due to an increase in inflation which was released above the consensus.

This is due to an increase in inflation data and could trigger an increase in Bank Indonesia interest rates which could hamper the country’s economic growth.

The decline in the JCI can also occur due to pressure from foreign investors who continue to sell.

Foreign investors continued to press and recorded a one-week net sell of Rp 2.64 trillion.

From this it can be concluded that the rupiah depreciated.

The Cause of JCI Drops Due to Inflation

JCI closed into the red zone in its first trading session which showed a decline of 1.7%.

A number of negative sentiments were the reason why the JCI fell.

Based on Bloomberg data, the JCI last week was in a weaker position.

Throughout trading, the JCI moved at a range of 6,940-6,777.

More or less there were only 123 stocks that rose.

Meanwhile, as many as 435 stocks experienced a decline and 133 stocks moved in place.

This condition provides data that market capitalization fell below Rp 9,000 trillion to Rp 8,914.1 trillion.

Not only that, the cause of the JCI’s decline also affected several big cap stocks, which also experienced a decline.

There is only one stock that rose 0.5% to the level of 4,020, namely PT Telkom Indonesia (Persero) Tbk. In addition, the stagnant shares of BBNI and BBCA also accompanied.

Fed Rate Increase

There are many reasons why the JCI fell, one of which was influenced by the increase in the Fed’s interest rates.

This is predicted after the US central bank The Fed announced its monetary policy in June.

The Fed meeting caught the attention of many people.

US inflation rose to 8.6% in May.

Above expectations or estimates make the Fed more aggressive and hawkish.

So decided to increase the Fed in June last.

Another estimate also states that the Fed Rate will rise by 50 bps and put pressure on the American stock market.

The occurrence of the JCI panic selling since the beginning of its opening occurred because it was in the era of consolidation.

Market participants still hope that if the closing can return, the closing is above 7,000.

So that it provides an opportunity for accumulation of big cap stocks that have decreased, one of which is banking.

The reasons for the decline in the JCI were quite diverse.

However, what is felt is due to inflation and the increase in interest rates by the US Fed.

This condition also has an impact on big cap stocks which have decreased.

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