Global Market Pulse: Linking DJIA, FTSE, Nikkei, HSI, and BI Rate to Indonesia’s Composite

Abstract

This study investigates the impact of major global stock indices and domestic monetary policy on the Indonesian Composite Stock Price Index (IHSG) during the period 2020–2024. The independent variables include the Dow Jones Industrial Average (DJIA), Financial Times Stock Exchange (FTSE), Nikkei 225, Hang Seng Index (HSI), and the Bank Indonesia 7-Day Reverse Repo Rate (BI7DRR). Monthly percentage changes were analyzed using multiple linear regression to examine both partial and simultaneous effects. Prior to hypothesis testing, classical assumption tests were conducted, including normality, multicollinearity, heteroskedasticity, and autocorrelation tests, all of which indicated that the regression model was valid. The results of the F-test show that the independent variables jointly have a significant effect on IHSG. However, the t-test results reveal that only FTSE has a positive and statistically significant effect on IHSG, while DJIA, Nikkei, HSI, and BI7DRR do not show significant individual effects. These findings suggest that the Indonesian stock market is more responsive to movements in the European market than to those in the United States or other Asian markets during the observed period. Additionally, domestic monetary policy, as proxied by BI7DRR, does not exert a direct short-term influence on IHSG fluctuations. This study contributes to the literature on market integration and contagion effects by highlighting the varying degrees of global financial influence on emerging markets such as Indonesia.