Global Markets Experience Mixed Trends

Global markets are witnessing a mixed trend amidst ongoing uncertainties about when the Federal Reserve (Fed) will commence interest rate cuts, with attention turning to the Producer Price Index (PPI) data in the United States today.

Despite the Consumer Price Index (CPI) in the United States registering an increase in February exceeding expectations, expectations regarding the Fed’s possible commencement of interest rate cuts in June remained unchanged. Investors’ focus has now shifted to whether the PPI data, to be announced today, will support inflation figures.

Analysts noted that this data could provide clues about the steps the Fed may take in the future. It is expected that the PPI will show a monthly increase of 0.3% and a yearly increase of 1.1% for February.

In the currency markets, while it is widely anticipated that the Fed will keep interest rates unchanged at its monetary policy meeting on March 19-20, the probability of the Bank starting to cut interest rates is priced at 10% in May and 69% in June.

Meanwhile, U.S. Treasury Secretary Janet Yellen expressed regret for calling inflation “transitory” in 2021, stating that she expects the largest contributor to inflation, which is rental costs, to decline this year, and noted that changes in rental rates may take some time to reflect in the CPI.

International credit rating agency Fitch Ratings increased its growth expectation for the global economy by 0.3 points to 2.4% for this year.

Following these developments, while selling pressure continues in U.S. Treasury bonds, the yield on the country’s 10-year Treasury bond rose for the fourth consecutive trading day, reaching 4.20%.

Gold, which peaked above $2,195 last week, is currently trading at $2,072, 0.1% below yesterday’s closing price.

The dollar index, which closed yesterday with a 0.1% decrease at 102.8, is now at 102.9, 0.1% above yesterday’s close.

The price of a barrel of Brent crude oil, after registering a 1.8% increase yesterday to close at $83.55 following a decrease in crude oil inventories in the U.S. and Ukraine’s attack on Russia’s largest oil refinery in the south, is continuing its upward trend, currently trading at $83.8, up 0.2% from the previous close.

In the cryptocurrency markets, with continued interest in Bitcoin exchange-traded funds (ETFs), Bitcoin reached a new peak at $73,658. Thus, the cryptocurrency renewed its record on every trading day of this week.

On the other hand, a bill passed the House of Representatives in the U.S. that paves the way for the ban of TikTok, which has about 170 million users.

On the last trading day of the week, while the S&P 500 index recorded a 0.19% decrease and the Nasdaq index recorded a 0.54% decrease on the New York Stock Exchange, the Dow Jones index rose by 0.10%. Futures contracts in the U.S. indices started the new day with a mixed trend.

In European markets, except for Germany, a positive trend prevailed yesterday.

While monitoring the verbal guidance of European Central Bank (ECB) members last week, ECB member Francois Villeroy de Galhau said, “There is a very wide consensus on reducing interest rates in the spring” since our Governing Council meeting last week.” ECB Member Martins Kazaks also indicated that a decision to lower interest rates could come in the next few meetings, stressing that there is no need to delay such a reduction.

Analysts pointed out that in the money markets, the probability of the ECB starting its first interest rate cuts in April is priced at 11% and in June at 88%.

Moreover, according to data released in the region yesterday, while the UK economy grew by 0.2% in January, it contracted by 0.1% compared to the previous three-month period covering November 2023-January 2024.​​​​​​​

Industrial production in the Eurozone remained below expectations, declining by 3.2% on a monthly basis in January and by 6.7% compared to the same period last year.

Yesterday, the CAC 40 index in France completed the day with a 0.62% increase, reaching 8,137.58 points, achieving its highest daily closing since all time. While the FTSE 100 index rose by 0.31% in the UK and the MIB 30 index increased by 0.39% in Italy, the DAX 40 index decreased by 0.02% in Germany. Futures contracts in European indices started the new day with a mixed trend.

Mixed trends were also observed in Asian stock markets

Analysts noted that uncertainty persists about whether the Bank of Japan (BoJ) will raise interest rates at its monetary policy meeting next week, but expectations for such a decision in the near term remain strong.

Furthermore, BoJ officials announced that they are considering ending the purchase of exchange-traded funds (ETFs) traded on the stock market, a program initiated in 2010.

While the Shanghai Composite index in China remained flat towards the close, the Nikkei 225 index in Japan recorded a 0.2% increase and the Kospi index in South Korea rose by 0.8%. The Hang Seng index in Hong Kong, on the other hand, declined by 0.5%.

In domestic markets, the BIST 100 index, which followed a downward trend yesterday, closed the day with a 1.75% loss at 8,910.23 points.

After closing yesterday’s trading day at 32.0818 with a fluctuating trend, the USD/TRY is trading at 32.1260 at the opening of the interbank market today.

Moreover, Erich Arispe Morales, Senior Director and Turkey Analyst at international credit rating agency Fitch Ratings, stated that the authorities in Turkey’s primary goal is to reduce inflation, expressing their expectation for continued policy tightening consistent with the reduction in inflation after the election.

Morales emphasized that they have increased confidence in Turkey’s current economic policy axis and that policies will be sustained, saying, “We have noticed a development where policy change in Turkey has not only reduced macroeconomic financial stability risk but has also improved external financing conditions, which is crucial.”

Analysts pointed out that today, housing sales and weekly monetary and banking statistics will be followed domestically, while in the United States, producer inflation and weekly jobless claims and retail sales data will be monitored. From a technical perspective, analysts noted that the support levels for the BIST 100 index are at 8,900 and 8,800 points, with resistance levels at 9,000 and 9,100 points.

The data to be followed in the markets today is as follows:

10:00 Turkey, February housing sales statistics

14:30 Turkey, weekly monetary and banking statistics

15:30 U.S., February producer inflation

15:30 U.S., weekly jobless claims

15:30 U.S., February retail sales

source: prepared by Melisa Beğiç

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