Global markets started the week cautiously, which will be followed by a busy macroeconomic data calendar, especially the US employment report.
Although there are still question marks about whether the fight against inflation will result in a recession around the world and concerns raised by the conflicts in the Middle East, recently announced macroeconomic data helps to keep the concerns limited in the markets.
Analysts stated that the signals to be received from the employment-oriented data to be announced this week could be decisive in the steps the US Federal Reserve (Fed) will take in the coming period, and said that the data in question is expected to provide more information about the course of the US economy.
On the other hand, Fed Chairman Jerome Powell’s statements today will be closely followed.
According to data released on Friday, personal consumption expenditures increased by 0.2 percent monthly in August, below expectations.
Personal consumption expenditures price index also increased by 0.1 percent monthly and 2.2 percent annually in August, below expectations.
The core personal consumption expenditures price index, which the Fed considers as an inflation indicator and excludes food and energy items, increased by 0.1 percent on a monthly basis and 2.7 percent on an annual basis in August. While the annual change in the index was in line with market expectations, the increase was estimated to be 0.2 percent on a monthly basis.
Analysts stated that below-expectations inflation indicators increased expectations that the Fed could now focus on supporting the labor market and continuing to reduce interest rates.
In addition, the consumer confidence index measured by the University of Michigan in the USA was revised upwards in September and reached 70.1, recording the highest level in 5 months.
While the statements from Fed officials continue to be the focus of the markets, St. St. Louis Fed President Alberto Musalem said interest rates should be lowered “gradually.”
Musalem, who predicts more than one 25 basis point interest rate cut for the rest of the year, stated that they may make faster cuts if the labor market weakens more than expected.
While the expectation that the Fed will cut 75 basis points by the end of the year remains strong in pricing in money markets, it is predicted that there will be a 50 basis point interest rate cut in November with a 54 percent probability.
With these developments, the US 10-year bond interest is currently at 3.76 percent, while the dollar index started the week at 100.4.
While the ounce price of gold lost 0.5 percent in value on Friday, it is currently trading at $2,655, 0.1 percent below the previous closing.
After starting the week with an increase in the barrel price of Brent oil, it is currently at 72.3 with an increase of 0.5 percent.
On Friday, the Dow Jones index increased by 0.33 percent, the S&P 500 index decreased by 0.13 percent and the Nasdaq index decreased by 0.39 percent. On Friday, the Dow Jones index made its all-time high closing with 42,313.00 points, after breaking a record by seeing 42,628.32 points during the day. Index futures contracts in the USA started the new week on a positive note.
While European stock markets were dominated by a buying trend on Friday, all eyes are on the Consumer Price Index (CPI) to be announced in Germany today.
While uncertainties remain regarding the speed and magnitude of the European Central Bank’s (ECB) easing process, it is estimated that the decrease in inflationary pressures in the region and signals of stagnation in economic activity may increase the bank’s dovish attitude.
Consumers’ inflation expectations for the next 12 months in the Eurozone dropped to the lowest level seen since September 2021, according to data released in the region on Friday.
In the Eurozone, the Economic Confidence Index decreased by 0.3 points to 96.2 in September.
On Friday, the DAX 40 index in Germany increased by 1.22 percent, the CAC 40 index in France increased by 0.64 percent, the FTSE 100 index in the UK increased by 0.43 percent and the FTSE MIB index in Italy increased by 0.92 percent. The DAX 40 index broke its intraday record on Friday, reaching 19,491.93 during the day, and achieved the highest closing of all time with 19,473.63 points. Index futures contracts in Europe started the day on a mixed note.
On the Asian side, a mixed course prevailed on the first trading day of the week, while Chinese markets rose sharply and Japanese markets fell sharply.
While the economic incentives announced by the Chinese government last week continue to have a positive impact on the markets, the government has made statements that banks will reduce mortgage interest rates to solve the current problems in the housing sector.
According to the data announced today in China, the September manufacturing industry Purchasing Managers Index (PMI) was above expectations with 49.8, and the September Caixin manufacturing industry PMI was below expectations with 49.3.
Although the service sector PMI was below expectations at 50.0 and the Caixin service sector PMI at 50.3, it was observed that economic activity in the service sector continued to remain strong.
Stating that economic activity in the manufacturing industry is still weak, analysts said that a revival in activity can be expected in the coming months following the announced economic incentives.
On the other hand, former LDP Secretary General Ishiba Shigeru, who served as minister of agriculture and defense in the past, won the presidential election of the ruling Liberal Democratic Party (LDP) in Japan.
Ishiba will be announced as the new prime minister of Japan in the coming days at the session of the House of Representatives (Shuugiin), which is dominated by the LDP and its coalition partner Komeito.
Analysts stated that there was a sales pressure in the country’s share markets due to the expectations that the Minister of State for Economic Security, Takaiçi Sanae, will be elected and the uncertainty about the new leader’s economic policies.
According to the data announced today in Japan, industrial production for August was below expectations with a decrease of 3.3 percent, while retail sales in August exceeded expectations with 0.8 percent.
Near the close, the Shanghai composite index in China increased by 6.6 percent and the Hang Seng index in Hong Kong increased by 3 percent, while the Nikkei 225 index in Japan decreased by 4.9 percent and the Kospi index in South Korea decreased by 1.2 percent.
BIST 100 index at Borsa Istanbul, which followed a sales-oriented trend on Friday, completed the day at 9,777.46 points, with a decrease of 0.53 percent compared to the previous closing.
While Dollar/TL closed at 34.1694 with a 0.1 percent increase on Friday, it is traded at 34.1750 at the opening of the interbank market today, just above the previous closing.
Today, analysts are looking for the Services Producer Price Index (H-PPI) and monthly money and bank statistics in the country, growth in the UK, inflation in Germany and the Dallas Fed manufacturing industry index in the USA, as well as Fed chairman Jerome Powell’s comments abroad. and ECB President Christine Lagarde’s speeches will be followed, and noted that 9,700 and 9,600 points in the BIST 100 index are support, and 10,050 and 10,200 levels are resistance.
