Emerging market equities, including Indonesia's IHSG, face renewed volatility as investors grapple with shifting expectations for Federal Reserve policy.
The central bank's stance on interest rates remains the dominant driver for global risk assets, with markets now pricing in a higher probability of additional rate hikes in 2026.
This repricing comes after a recent US jobs report came in softer than anticipated.
Rather than signaling an imminent pivot to easing, the labor data has triggered a complex reassessment among traders.
Just a week ago, the market consensus leaned heavily toward a pause or cut; now, the probability of multiple hikes has surged, reflecting concerns that the Fed may need to maintain a restrictive posture for longer to ensure inflation remains subdued.
The shift in sentiment has rippled across global markets.