The Indonesia Stock Exchange Composite Index (IHSG) declined by 1.7% during the first session of trading on Monday, June 23, 2025. The index dropped by 117.43 points, settling at 6,789.71. A total of 538 stocks fell, 124 rose, and 133 remained unchanged. The midday trading value reached IDR 7.54 trillion, involving 13.19 billion shares across 807,285 transactions. As a result, the market capitalization declined to IDR 11,907.98 trillion.

According to Refinitiv data, all sectors ended in the red. The utilities sector posted the steepest drop at 4.13%, followed by property with a 3.11% fall, and energy down 2.47%.

Several stocks significantly dragged the index lower. Sinar Mas mining company DSSA dropped 5.83%, contributing the largest negative impact of -13.36 index points.

Renewable energy company BREN also weighed heavily on the index, contributing -10.45 index points, followed by BBRI, which dragged the index down by -9.18 points.

The IHSG’s downturn reflects investors' cautious sentiment, as the market shifts into risk-off mode due to rising concerns, especially geopolitical tensions in the Middle East and economic data that reinforce the Federal Reserve’s hawkish stance.

U.S. President Donald Trump announced that American forces had launched airstrikes on three Iranian nuclear sites—Fordow, Natanz, and Isfahan—on Saturday night, June 21, 2025 local time.

According to Reuters, Trump described the operation as a “highly successful strike”. He had reportedly been weighing the decision for several days, and U.S. B-2 bombers were used in the weekend mission.

The U.S. involvement in the Iran-Israel conflict has further intensified and broadened geopolitical risks. This escalation may potentially draw in other major powers such as Russia, China, and European nations.

Meanwhile, Iran has expressed its intention to shut down the Strait of Hormuz. According to state-run Press TV, the Iranian legislature has reached a consensus to close the vital shipping lane, though the final decision lies with the Supreme National Security Council and Supreme Leader Ayatollah Ali Khamenei.

The Strait of Hormuz, which separates Iran and Oman, serves as a critical route for oil shipments from Persian Gulf nations. It connects the Persian Gulf to the open sea and is considered one of the most crucial oil chokepoints globally.

Iran controls two key maritime routes vital to global oil trade: the Strait of Hormuz and the Red Sea.

Approximately 20% of global oil supply and 30%-35% of LNG shipments pass through the Strait of Hormuz. Meanwhile, the Red Sea handles about 12% of global oil trade and 6% of LNG.

Tensions escalated further after Iran officially declared the Strait of Hormuz closed overnight. According to Macquaite, if 15 million barrels per day are disrupted, oil prices could spike to US$240 per barrel.

Bloomberg forecasts oil prices may reach US$130 per barrel, with U.S. annual inflation (year-on-year) possibly rising to 3.9%.

Goldman Sachs and Rapidan Energy project oil could surge past US$100 per barrel if the closure is prolonged.

Such a rise in oil prices could have broad inflationary effects globally, potentially delaying interest rate cuts and leading to a longer period of high interest rates.

As a result, the economic outlook is expected to turn risk-off, shifting attention to energy- and commodity-sensitive assets, as well as safe-haven assets like gold.

Since the outbreak of the Iran-Israel conflict on June 13, 2025, global oil prices have already risen by 11%.