In global markets, although moderate inflation data in the USA supports risk appetite, the lack of a clear statement from the parties regarding a new ceasefire in the Middle East limits optimism.
According to the data announced yesterday in the USA, the Consumer Price Index (CPI) increased by 0.1 percent on a monthly basis and 3.4 percent on an annual basis in July, in line with market expectations.
When the sub-items of monthly inflation were examined, it was seen that the price decline in the energy group lost momentum compared to June, but the downward trend in this item continued. While annual inflation fell to its lowest level in the last 4 months, core inflation recorded its lowest level since February with 2.5 percent on an annual basis.
Analysts stated that these data strengthened the view that the slowdown in inflation was back on track and that the US Federal Reserve (Fed) postponed expectations for interest rate increases.
In the pricing in the money markets, the probability of the Fed increasing interest rates in September has fallen below 50 percent, while the possibility of an interest rate increase by the end of the year has lost its strength.
Analysts stated that consumer inflation in the USA may continue to slow down due to the decline in energy costs if the steps towards establishing a permanent peace in the Middle East strengthen and the geopolitical risks on the Strait of Hormuz decrease, and in this sense, they said that today’s Producer Price Index (PPI) data in the USA may increase volatility in the markets.
Statements from third parties regarding the agreement between the USA and Iran on the geopolitical side attracted attention. Pakistani government sources said that the United States and Iran “agreed” to extend the 60-day ceasefire under the Islamabad Accord, which expires on August 17.
Sources speaking to the AA correspondent stated that the parties conveyed their approval to the mediators regarding the extension of the period, and that contacts with the parties continue regarding how long the ceasefire will be extended after August 17.
US President Donald Trump stated that his country has “full control” over the Strait of Hormuz.
Arguing that the US blockade in the Strait of Hormuz is described by everyone as a “wall of steel” and that there is nothing Iran can do about it, Trump said, “They have no navy, no air force, their remaining soldiers cannot receive their salaries. The Revolutionary Guard Army has been decimated and they are running away. Their leadership is uncertain. They have no money. Their country is being hit.” he said.
Claiming that the only thing Iran has is “fake press” and “300 percent” inflation, Trump argued that the country is getting worse. The Iranian administration responded to Trump’s statements regarding the reopening of the Strait of Hormuz by saying, “The Strait will not be reopened until our conditions are accepted.” he replied.
Following these developments, a limited decline was observed in oil prices and US bond interest rates. While the financial results of the companies announced in the ongoing balance sheet season were also in the focus of investors, the results indicating that the demand for artificial intelligence infrastructure remained strong supported the rise in technology stocks.
Shares of cloud computing company CoreWeave gained 19.3 percent after its second-quarter revenue nearly doubled compared to the same period last year.
Super Micro Computer’s shares also rose 19.02 percent after the company’s financial results exceeded expectations. While the shares of other companies related to artificial intelligence also increased, Nvidia shares gained 3 percent, Micron Technology shares gained 4.9 percent and Oracle shares gained 5.4 percent.
With these developments, the US 10-year bond interest rate decreased by 2 basis points to 4.68 percent, while the dollar index continued its rise for the 3rd trading day yesterday due to the unclear reconciliation process in the Middle East and uncertainties regarding the Fed’s interest rate path.
The index increased by 0.1 percent to 99.9 and exceeded the 100 threshold during the day. The dollar index is at the level of 100, with an increase of 0.1 percent on the new day.
The appreciation in the ounce of gold slowed down due to the strengthening of the dollar and the high trend in bond interest rates. While the ounce price of gold found buyers at 4 thousand 394 dollars with a decrease of 0.3 percent, the barrel price of October delivery Brent oil is at 88.7 dollars with a decrease of 0.3 percent.
With these developments, the S&P 500 index increased by 0.26 percent and the Nasdaq index increased by 0.54 percent, while the Dow Jones index remained flat. Index futures contracts in the USA started the day mixed.
Due to the complex processes in the Middle East, the escalation of tensions between Russia and Ukraine, and the fact that energy costs still have not decreased at the desired level, European stock markets, except Italy, followed a bearish trend yesterday.
Data released in the region indicated that the energy burden of price increases continues. Annual inflation in Germany rose to 2.8 percent in July due to the increase in energy prices.
The fact that inflation concerns in the region have not yet eased can be felt in the expectations for the European Central Bank (ECB). In money markets, the probability that the ECB will increase interest rates in September is priced at 80 percent. On the other hand, industrial production data in the region is in the focus of investors today.
On the geopolitical side, the rise in tension between Russia and Ukraine in the Black Sea caused an increase in risk perception in the markets. The Security Service of Ukraine (SBU) reported that 2 frigates and 1 patrol boat of the Russian navy were targeted in the attack on the Novorossiysk Naval Base in Russia.
Russian Foreign Ministry Spokesperson Mariya Zaharova stated that Ukraine’s actions in the Sea of Azov and the Black Sea undermine global food security and said, “The actions of the Kiev administration, aiming to create chaos in the global food market, serve the interests of Western countries.” he said.
With these developments, the FTSE 100 index in England decreased by 0.1 percent, the CAC 40 index in France decreased by 0.46 percent and the DAX 40 index in Germany decreased by 0.23 percent, while the FTSE MIB 30 index in Italy remained flat. Index futures contracts in Europe started the day with a positive trend.
While a buying-oriented trend is observed on the Asian side, the moderate course of inflation in the USA and the weakening of hawkish expectations for the Fed support the regional markets.
In the data announced today in Japan, producer inflation was below expectations with 0.1 percent on a monthly basis and 7.2 percent on an annual basis in July. Although the annual PPI remained below the forecasts, it accelerated compared to the previous month.
On the other hand, it is stated that the Japanese government may support the interest rate increase of the Bank of Japan (BoJ) in order to increase the effect of the last foreign exchange intervention carried out due to concerns that the depreciation of the yen will increase prices. According to the pricing in the money markets, there is a 75 percent probability that the BoJ will increase the policy rate by 25 basis points next month.
With these developments, the Nikkei 225 index in Japan increased by 1.6 percent, the Kospi index in South Korea increased by 4 percent, the Shanghai composite index in China increased by 0.5 percent and the Hang Seng index in Hong Kong increased by 0.1 percent.
BIST 100 index at Borsa Istanbul, which followed a buying-oriented trend yesterday, closed the day at 14,110.14 points, gaining 2.96 percent in value. The index achieved its highest daily increase since June 15, exceeding the 14,000 point level.
The August futures contract based on the BIST 30 index in the Borsa Istanbul Futures and Options Market (VIOP) rose by 0.37 percent in the last evening session compared to the normal session closing.
On the other hand, all eyes in the country turned to the “Balance of Payments” data with the 3rd Inflation Report information meeting of the year to be held by the Central Bank of the Republic of Turkey (CBRT).
Economists participating in the AA Finance Balance of Payments Expectations Survey estimated that the current account would have a deficit of 4 billion 918.2 million dollars in June. Economists predicted that the current account would have a deficit of 52 billion 391 million dollars this year.
While Dollar/TL closed yesterday at 47.7640, today it is traded at 47.7740 at the opening of the interbank market, just above the previous closing.
Analysts stated that today, the CBRT Inflation Report, current account balance and money and bank statistics will be followed domestically, and abroad, an intense data agenda, especially PPI in the USA and growth in the UK, noted that technically, 14,200 and 14,300 points in the BIST 100 index are resistance, while 14,000 and 13,900 points are support.
