Uncertainties regarding the future monetary policy of the US Federal Reserve (Fed) continue to be influential on asset prices.
Analysts stated that the Consumer Price Index (CPI) data to be announced in the USA today may affect the expectations regarding the decisions to be taken by the Fed at the June meeting, and stated that the possibility of a 25 basis point increase in the pricing in the money markets continues to gain strength. Accordingly, the projections for the Fed to raise interest rates by 25 basis points next month rose to 25 percent.
While the verbal guidance of Fed members and macroeconomic data that exceeded expectations were influential in this development, New York Fed President John Williams stated yesterday that he expects inflation to fall to around 3.25 percent this year before returning to the bank’s long-term target of 2 percent in the next 2 years.
Stating that he estimates the unemployment rate in the country to be around 4-4.5 percent this year as a result of the slow growth, Williams said that the increase in employment continues to be strong amid the signs that the demand for workers is slowing down.
Reminding that the Fed did not say that it has completed the rate hike, Williams noted that he does not see any reason for a decrease in interest rates this year, and that additional interest rate hikes may be possible if inflation does not decrease.
On the other hand, with less than a month left before the US federal government hits the cash-strapped debt limit of $31.4 trillion, US President Joe Biden discussed the debt limit issue with Congressional leaders at the White House.
Biden, at the press conference held after the meeting, stated that they had a “productive” discussion on the debt limit and that they would meet again on Friday.
With these developments, the S&P 500 index fell by 0.46 percent, the Nasdaq index by 0.63 percent and the Dow Jones index by 0.17 percent in the New York stock market yesterday. Index futures contracts in the USA started the new day with rising.
Europe
Equity markets in Europe followed a sales-heavy course yesterday, excluding Germany, while economic activity, which continues to slow down despite the high inflation in the region, complicates pricing.
According to data released in Germany yesterday, industrial production fell by 3.4 percent monthly, falling short of expectations, while European Central Bank (ECB) Member Isabel Schnabel said that the ECB needs to do more to control inflation.
ECB Member Martins Kazaks also stated that the prediction that the ECB will end the rate hikes in July may be wrong.
Analysts said money markets were priced in that the ECB could end interest rate hikes sooner than expected, but the net tone of verbal guidance from ECB members added to the uncertainties.
Analysts stated that the bank is expected to increase interest rates by 25 basis points with a probability of 85 percent at the meeting next month, and stated that the rate hike expectations, which were previously 50 basis points, decreased to 25 basis points in the rest of the year.
While DAX 40 index gained 0.02 percent in Germany yesterday, FTSE 100 index decreased by 0.18 percent in England, CAC 40 index decreased by 0.59 percent in France and MIB 30 index decreased by 0.16 percent in Italy. Index futures contracts in Europe started the new day with rising.
Asia
While Asian stock markets followed a sales-weighted course parallel to the New York stock market today, the leading index fell to 97.5 in March, according to the data announced in Japan.
Analysts said that investors took a “wait-and-see” attitude before the inflation data to be announced in the USA, adding that the Fed’s interest rate hikes feed the risk of recession, which put pressure on Asian stock markets.
Close to the closing, Nikkei 225 index decreased by 0.4 percent in Japan, Shanghai composite index decreased by 1.2 percent in China, Hang Seng index decreased by 0.5 percent in Hong Kong and Kospi index decreased by 0.8 percent in South Korea.
Domestic markets
BIST 100 index in Borsa Istanbul, which followed a sales-weighted course in the domestic market yesterday, closed the day at 4,536.20 points, 0.56 percent below the previous closing.
Dollar/TL is trading at 19,5250 at the opening of the interbank market today, after closing at 19,5252 with an increase of 0.1 percent yesterday.
Analysts stated that today, industrial production and unemployment rate in Turkey and inflation data in Germany and the USA abroad will be followed, and noted that technically, 4.500 and 4.400 levels in the BIST 100 index are in the position of support and 4.600 points in the resistance position.
