Global markets remain negative due to ongoing tensions in the Middle East, strong sales pressure in the bond market, and uncertainties regarding artificial intelligence companies.
High oil prices and rising bond interest rates due to the ongoing conflicts in the Middle East cause investors to be cautious ahead of the interest rate decisions of leading central banks.
Analysts said that markets have repriced inflationary risks with the cost increases brought about by the energy shock, which may make the job of central banks difficult.
A new attack by the Houthis in Yemen against Saudi Arabia has led to increased concerns about oil supply. With this development, the barrel price of November delivery Brent oil is at 107.4 levels, with an increase of 1.7 percent.
US President Donald Trump stated that oil prices will fall when the conflict with Iran ends.
The rapid rise in oil prices due to the increasing geopolitical tensions in the Middle East triggered concerns that inflation may be permanent. With these concerns, the US 10-year bond interest rate rose to 5.03 percent, the highest level since July 2007.
Strengthening expectations that the US Federal Reserve (Fed) will tighten monetary policy as part of the fight against inflation also causes selling pressure on bond interest rates. The Fed’s 2-day interest rate decision meeting will begin today. Based on the pricing in the money markets, it is considered certain that the bank will increase interest rates.
The bank last increased interest rates in July 2023. With pricing that the Fed will increase interest rates, the dollar index is at 99.6 with an increase of 0.1 percent.
Despite the rising dollar index, oil prices and bond interest rates, an ounce of gold is traded at $4,305 with an increase of 0.1 percent.
Calls to slow down technology development in the field of artificial intelligence continue to determine the direction of the markets. Given the intense competition between the US and China, there is uncertainty about whether there will be a coordinated slowdown in artificial intelligence development.
Meanwhile, the US technology company Microsoft has published draft rules that will impose limits on the behavior of artificial intelligence models it will develop in the future, as discussions on artificial intelligence security intensify.
US President Donald Trump claimed that “a sick conspiracy is being carried out” to get artificial intelligence technology out of control. On the other hand, the US Treasury Department added VTB Bank, one of Russia’s leading financial institutions, to its sanctions list, as part of the “economic exclusion operation” against Iran, for allegedly helping the country evade sanctions.
The New York Stock Exchange completed the first trading day of the week with a decline due to concerns about a slowdown in the field of artificial intelligence. Among the chip companies, Nvidia’s shares lost 3.4 percent, AMD’s shares lost 4.4 percent, Broadcom’s shares lost 4.8 percent, Intel’s shares lost 5.6 percent and Marvell Technology’s shares lost 7.3 percent.
With these developments, the Dow Jones index lost 0.29 percent, the S&P 500 index lost 0.48 percent and the Nasdaq index lost 0.56 percent.
Index futures contracts in the USA started the day negatively.
A negative trend was observed in European stock markets, except for the UK, as the rise in oil prices continued to suppress risk appetite and the decline in technology stocks accelerated.
Shares of Dutch technology company ASML decreased by 6.1 percent, and shares of German technology company Infineon Technologies decreased by 7.7 percent. Analysts noted that Europe’s exposure to the AI theme may be more limited against the US and Asia, and selling pressure from AI may be lower.
Geopolitical developments have an impact on the direction of European markets.
Mining stocks also declined due to the decline in copper prices in the region. The UK stock market rose as rising oil prices supported shares of energy companies.
While the selling pressure in the bond market in the region came to the fore, Germany’s 10-year bond interest hit the highest level since 2009 at 3.55 percent.
On the other hand, European Central Bank (ECB) Board Member Isabel Schnabel warned that the rise in energy prices is worrying.
With these developments, the FTSE MIB index in Italy lost 1.68 percent, the CAC 40 index in France lost 0.76 percent and the DAX 40 index in Germany lost 0.50 percent. In England, the FTSE 100 index gained 0.44 percent.
Index futures contracts in Europe started the day negatively.
With these developments, a negative trend is observed in Asian stock markets. According to the announced macroeconomic data, retail sales in China for August failed to meet expectations, increasing by 0.4 percent annually. Fixed capital investments in the country for August were worse than expectations, with a decrease of 7.2 percent.
The unemployment rate in China for August was above expectations at 5.3 percent. On the other hand, industrial production in the country for August increased by 5.2 percent.
While these data reveal that the problems regarding the country’s economy continue, it is predicted that the pressure on the Beijing administration for more financial support may increase. Selling pressure in the bond market is also deepening in Asian markets. Japan’s 10-year bond interest rose above 3 percent again.
With these developments, near the closing, the Kospi index in South Korea decreased by 0.6 percent, the Hang Seng index in Hong Kong decreased by 0.2 percent, the Shanghai composite index in China decreased by 0.1 percent, and the Nikkei 225 index in Japan decreased by 0.1 percent.
BIST 100 index at Borsa Istanbul, which followed a sales-oriented trend yesterday, finished the day at 14,235.83 points, losing 1.60 percent of its value.
The October futures contract based on the BIST 30 index in the Borsa Istanbul Futures and Options Market (VIOP) remained flat in the evening session last night compared to the normal session close.
While Dollar/TL completed the day yesterday at 48.6170 with a 0.2 percent increase, today it is traded at 48.6373 at the opening of the interbank market, just above the previous closing.
Analysts stated that today the budget balance at home, the unemployment rate in the UK, the foreign trade balance in the Eurozone and the New York Fed manufacturing industry index in the USA will be followed intensively on the data agenda abroad, and noted that technically, 14,100 and 14,000 points in the BIST 100 index are support and 14,300 and 14,400 points are resistance.
