Indonesian Stocks Crash Most Since 1998 After MSCI Move

Summary

Indonesian stocks suffered their biggest one-day fall since 1998 after MSCI said the market no longer merits emerging-market status, setting up forced passive outflows. Elsewhere, Asian stocks rebounded after Thursday’s AI-led rout, with the KOSPI and Nikkei recovering some losses, while US and European futures edged higher. Treasury yields steadied after Thursday’s plunge. BoE Governor Andrew Bailey said soaring energy prices had so far had limited impact on wider UK inflation.

Equities

The FTSE 100 rose 1.1% to 10,840.35 on Thursday, its highest close since 26 August, after Chancellor John Healey reaffirmed the government’s commitment to fiscal discipline. The FTSE 250 gained 0.26%.

Healey said this month’s Budget would focus on strengthening economic resilience and that he and Prime Minister Andy Burnham were aligned on fiscal discipline. The UK economy grew 0.1% in August, beating forecasts of a 0.1% contraction.

THG surged 16.3% on Thursday after the e-commerce group raised its annual profit forecast. Mondi slumped 7.9% after the paper and packaging firm raised prices on several paper grades to offset higher energy costs.

AstraZeneca climbed 3.2% and GSK gained 2.9% on Thursday, while British American Tobacco rose 2.5% and Unilever added 1.8%.

Antofagasta fell 4.1% on Thursday after the Chilean miner reported lower third-quarter copper production than a year earlier, with industrial metal miners down 1.4% on weaker copper prices.

Bank of England chief economist Huw Pill said any future rate rise should not be seen as the start of a long series of increases.

The S&P 500 rose 0.33% to 7,744.06 on Thursday, recovering from early losses as investors moved from AI stocks into healthcare and consumer shares. The Dow Jones Industrial Average climbed 1.08% to 52,177.69, while the Nasdaq edged up 0.08% to 26,713.03.

FMC tumbled more than 30% on Thursday after the agrichemicals company sharply cut its third-quarter outlook. Eli Lilly gained more than 3%, UnitedHealth added 2.8% and Walmart rose 1.4% after Deutsche Bank upgraded all three.

Nvidia fell 1.8% on Thursday after chipmaker TSMC sounded a cautious note on 2027, despite posting a sixth straight record quarterly profit. Hewlett Packard Enterprise dropped 7.1% and Dell lost 6.9%, extending losses from Wednesday, while the Philadelphia semiconductor index fell 0.9% for a seventh straight session.

Rocket Lab fell 6.6% on Thursday after delaying the first launch of its larger Neutron rocket until next year. Traders now see a 67% chance of a Federal Reserve rate rise by December, up from 62% on Wednesday, after US producer prices rose by the most in four and a half years in September.

Forex & Commodities

The US dollar was down early this morning at 101.9 against a basket of currencies, heading for its first weekly fall in five weeks as a drop in US yields and losses in AI stocks weighed on the greenback. Against the yen, the dollar was down at 157.9 yen. The euro was up at $1.123, recovering from a 17-month low, while the British pound was slightly firmer at $1.330.

The Australian dollar edged up to $0.6946, although it remains on course for a weekly loss after a weak jobs report on Thursday reduced expectations of another interest rate rise. The New Zealand dollar climbed to $0.5655.

Fed Chair Kevin Warsh offered few clues on policy at the IMF annual meeting in Bangkok, saying only that the global economy has broadly matched expectations since the Fed met in September. US producer prices rose by the most in four and a half years in September, according to figures released on Thursday. Markets are pricing a 72% chance that the Fed will leave rates unchanged at its meeting later this month, up from 53% a month earlier.

Spot gold was up 1.2% at $4,153 an ounce late on Thursday, ending a run of three sessions of losses as the dollar and Treasury yields fell. Silver rose to $57.05, platinum climbed to $1,622 and palladium gained to $1,131.

Oil prices eased early this morning but remain on track for weekly gains. Brent crude was down at $105.4 a barrel, while WTI fell to $97.48, after settling more than 3% higher on Thursday following a large draw in US crude stocks caused by hurricane production shut-ins.

Flows through the Strait of Hormuz averaged 11.62 million barrels a day in the seven days to October 13, around 68% of normal levels, as Iranian attacks on shipping intensified. The International Energy Agency agreed on Thursday to release more than 20 million barrels of diesel, along with any oil remaining from the emergency release pledged in March.

Economic Calendar

•      Euro area HICP for September (final)

•      Italy CPI for September (final)

•      US import and export prices for September

•      US industrial production for September

•      IMF and World Bank annual meetings continue in Bangkok