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Indonesia’s benchmark index slipped 31 points, or 0.5%, to 6,570 in Tuesday morning trade, extending losses for a sixth straight session and hovering near its weakest level since mid-2025. Sentiment was pressured by a retreat in U.S. equity futures, even as reports suggested President Trump postponed a planned strike on Iran. Locally, caution mounted as Bank Indonesia kicked off a two-day policy meeting, with expectations the board will lift rates to 5% after holding steady at 4.75% since last October. Political debate also flared after President Prabowo remarked that villagers are unaffected by rupiah weakness because they do not use U.S. dollars, drawing criticism over the government’s economic sensitivity. Sectoral losses were led by energy, non-cyclicals, and property, though gains in healthcare and cyclicals helped cap declines. Major laggards included Chandra Asri Pacific (-11.2%), Sumber Global Energy (-5.4%), Hartadinata Abadi (-4.2%), and Raharja Energi Cepu (-3.4%).

Indonesia Equities Fall for 6th Session

Japan’s 10-year government bond yield rose to around 2.75% on Tuesday, remaining close to 29-year highs after stronger-than-expected economic growth data reinforced expectations for further policy tightening. Japan’s economy expanded 0.5% quarter-on-quarter in the first quarter, accelerating from 0.2% in Q4, exceeding market forecasts of 0.4%, and marking the fastest pace of growth since Q3 2024. The data strengthened the case for additional Bank of Japan interest rate hikes, although the outlook remains uncertain as the broader economic impact of the Middle East conflict has yet to be fully reflected in the figures. Adding to hawkish sentiment, BOJ board member Kazuyuki Masu last week urged policymakers to raise rates as soon as possible, citing increasingly persistent inflation risks linked to the conflict. Investors are now focused on upcoming trade and inflation reports later this week for further insight into the strength of the Japanese economy.

Japan 10-Year Yield Climbs After Strong GDP Growth

The yield on the US 10-year Treasury note hovered around 4.6% on Tuesday, pausing its recent climb as renewed optimism surrounding a potential US-Iran agreement eased concerns about inflation and further interest rate hikes. President Donald Trump said he suspended a planned strike on Iran scheduled for Tuesday after appeals from Saudi Arabia, Qatar, and the UAE, adding that the Gulf nations believed a deal with Tehran acceptable to Washington could still be achieved. Even so, the benchmark yield remained near its highest levels in more than a year as elevated oil prices linked to the Middle East conflict and accelerating US inflation led traders to rule out Federal Reserve rate cuts this year, while also boosting speculation that the Fed could still raise rates before year-end. Investors are now awaiting the latest FOMC minutes and flash US PMI data for additional clues on the outlook for monetary policy and economic activity.

US 10-Year Yield Holds Steady

The Shanghai Composite fell 0.4% to 4,115 on Monday, while the Shenzhen Component dropped 0.8% to 15,402, with both benchmarks marking their fourth consecutive session of decline, dragged down by significant losses in tech shares. Hygon Information Technology (-2.9%), Zhongji Innolight (-2.1%), Eoptolink Technology (-1.9%), and Victory Giant Technology (-1.8%) were notable laggards as investors locked in profits from the recent surge in tech shares and gearing up for Nvidia's quarterly reports this week. In a similar vein, Nvidia CEO Jensen Huang stated that China will eventually permit the import of AI processors from the US. The recent remarks were made following the high-stakes conference between Presidents Donald Trump and Xi Jinping, during which Xi met Huang and other US corporate executives. On the monetary policy front, investors will be anticipating Wednesday's decision on the one-year and five-year loan prime rates, which are expected to remain at 3% and 3.5%, respectively.

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