A negative trend stands out in global markets following the increase in oil prices due to the conflict in the Middle East and the US Federal Reserve’s (Fed) keeping the policy rate constant.
News flow regarding the ongoing tension in the Middle East, movements in oil prices and macroeconomic data announced in the USA continue to have an impact on the direction of the markets. In this environment of increasing tension, cautious and “hawkish” signals from the Fed increased the global risk perception.
Following the targeting of oil refineries by the US-Israel, Iran’s announcement that it would strike US-related oil facilities in Saudi Arabia, the United Arab Emirates and Qatar and its attacks on some energy facilities were effective in the upward movement in oil prices.
At a time when the rise in energy costs increased concerns about the inflation outlook, data released in the USA revealed that producer inflation accelerated in February. Producer Price Index (PPI) in the USA increased by 0.7 percent on a monthly basis and 3.4 percent on an annual basis in February, exceeding expectations.
Producer inflation reached its highest level in the last year on an annual basis. PPI increased by 0.5 percent on a monthly basis and 2.9 percent on an annual basis in January. Core PPI, which does not include variable food and energy prices, increased by 0.5 percent on a monthly basis and 3.9 percent on an annual basis in February, above expectations.
On the monetary policy front, the Fed kept the policy rate constant in the range of 3.5-3.75 percent, in line with expectations. In the Fed’s monetary policy decision text, “The effects of developments in the Middle East on the US economy are uncertain.” evaluation was included.
Announcing its economic projections, the Fed kept its forecast for the federal funds rate at 3.4 percent for the end of this year, signaling that its prediction of a single interest rate cut in 2026 was maintained.
At the press conference held after the interest rate decision, Fed Chairman Jerome Powell said that the effects of the developments in the Middle East on the US economy are still uncertain and said, “In the short term, rising energy prices will push up general inflation, but it is too early to know the scope and duration of the possible effects on the economy.” he said.
Stating that short-term indicators of inflation expectations have increased in recent weeks, Powell stated that this situation probably reflects the significant increase in oil prices caused by supply disruptions in the Middle East.
In addition, the Bank of Canada (BoC) left the policy rate constant at 2.25 percent in its third consecutive meeting.
Due to the rise in oil prices, Iran’s retaliatory attacks and hawkish messages from the Fed, yesterday the Dow Jones index fell by 1.63 percent, the Nasdaq index by 1.46 percent and the S&P 500 index by 1.36 percent. Index futures contracts in the USA started the new day with buyers.
While a sales-oriented trend was prominent in the bond markets in the USA on the new day, the US 10-year bond interest rose to 4.28 percent. While the dollar index increased by 0.7 percent yesterday to 100.2, it is at 100.1 with a decrease of 0.1 percent on the new day.
The series of declines in gold prices completed its 6th trading day yesterday, due to the decrease in interest rate cut expectations for the Fed and the strengthening of the dollar index. The ounce price of gold, which closed at 4 thousand 819 dollars with a 3.7 percent loss of value yesterday, is traded at 4 thousand 850 dollars with an increase of 0.7 percent on the new day.
The barrel price of Brent oil closed at 107.3 dollars with an increase of 6.4 percent yesterday, after Iran targeted some refineries and production centers and announced that it would continue to do so. While the barrel price of Brent oil continues to rise on the new day, it is currently traded at $108.7 with a 1.3 percent premium.
While European stock markets followed a negative trend yesterday due to the sharp rise in oil prices and the impact of geopolitical tensions, the monetary policy decisions of the European Central Bank (ECB) and the Bank of England (BoE) are in the focus of investors on the new day.
While it is certain in the money markets that the ECB will not change its three main policy rates today, it is predicted that the bank may tighten earlier than expected due to the tensions in the Middle East.
BoE, whose interest rate cut expectation came to the fore at the beginning of the month, is expected to keep its policy rate unchanged.
While conflicts continue in the Middle East, diplomatic developments are also closely followed. Iranian Foreign Minister Abbas Erakchi and European Union (EU) High Representative for Foreign Affairs and Security Policy Kaja Kallas discussed the developments in the region following the US and Israel’s attack on Iran, as well as its regional and international effects and consequences.
Erakçi stated that the disruption of maritime activities in the Strait of Hormuz is a result of the US-Zionist imposition war and said that the EU and European countries should put pressure on the aggressors and try to stop their aggression.
Kallas also expressed her concern about the security, humanitarian and economic consequences of the war and emphasized the EU’s position that the war should be ended immediately.
On the other hand, the EU has introduced “EU Inc.”, which will allow entrepreneurs to establish companies completely online throughout the Union within 48 hours. prepared the plan.
EU Commission President Ursula von der Leyen said at a press conference in Brussels, “With EU Inc., every entrepreneur will be able to establish a company from anywhere in the EU within 48 hours. The entire process is completely digital and the cost will be under 100 euros. There will be no minimum capital requirement.” he said.
With these developments, the FTSE 100 index in England lost 0.94 percent, the FTSE MIB 30 index in Italy lost 0.33 percent, the CAC 40 index in France lost 0.06 percent, and the DAX 40 index in Germany lost 0.96 percent. Index futures contracts in the region started the new day with sellers.
While a negative trend came to the fore in Asia due to the acceleration in oil prices and the strengthening of concerns about energy supply, the Bank of Japan (BoJ) kept the policy rate constant at 0.75 percent, in line with expectations.
While the BoJ’s decision was taken with a vote of 8 to 1, Hajime Takata voted for the interest rate increase.
According to macroeconomic data announced in the region, core machinery orders in Japan for January exceeded expectations with an increase of 13.7 percent on an annual basis. Industrial production for the same period was above expectations, with a monthly increase of 4.3 percent. The capacity utilization rate in the country for January increased by 2.9 percent.
In addition to these developments, geopolitical tension and acceleration in oil prices across the region created selling pressure, while resilience in the financial sector in South Korea and Japan and the technology sector in Hong Kong attracted attention.
With these developments, near the closing, the Nikkei 225 index in Japan fell by 3.3 percent, the Shanghai composite index in China fell by 1 percent, the Hang Seng index in Hong Kong fell by 1.8 percent and the Kospi index in South Korea fell by 2.6 percent.
MARKETS WILL CLOSE EARLY
BIST 100 index at Borsa Istanbul, which followed a sales-oriented trend yesterday, finished the day at 13,115.13 points, losing 0.78 percent of its value. Today, there will be a half-day session in domestic markets as it is the eve of Eid al-Fitr.
The April futures contract based on the BIST 30 index in the Borsa Istanbul Futures and Options Market (VIOP) was traded at 15,226.00 points in last night’s session, with a decrease of 0.51 percent compared to the normal session closing.
While Dollar/TL closed yesterday at 44.2110, today it is traded at 44.3200 at the opening of the interbank market, with an increase of 0.2 percent compared to the previous closing.
Analysts stated that weekly international reserves and foreign exchange liquidity will be followed domestically today, as well as the interest rate decisions of the ECB in Europe and the BoE in the UK, as well as the intensive data agenda abroad, and noted that technically, 13,100 and 13,000 points in the BIST 100 index are support, while 13,200 and 13,300 points are resistance.
