The developments regarding the debt limit crisis in the USA and the question marks about the steps to be taken by the Fed are leading investors to be cautious.
The bill, which envisions a suspension of the debt limit until 2025 and limiting federal spending for 2 years, was approved by the US House of Representatives yesterday, while the bill must pass the Senate by Monday. It is stated that the bill could pass the Senate today, which is controlled by the Democrats.
On the other hand, according to the macroeconomic data announced in the country, while the labor market remains warm, the Number of Jobs Vacancies for JOLTS exceeded the market expectations with 10 million 103 thousand in April.
On the other hand, in the Fed’s “Beige Book” report, it was reported that economic activity in the country changed “very little” in April and early May, while future growth expectations deteriorated slightly.
While following the verbal guidance of the Fed officials, Philadelphia Fed President Patrick Harker stated that the Fed should not raise interest rates at its upcoming June meeting. Stating that he thinks that a meeting can be skipped during the rate hike, Harker noted that future data may change his mind.
Fed Board Member Philip Jefferson said that the Fed’s decision to keep the interest rate constant at a meeting should not mean that monetary policy tightening has ended.
After these developments, the expectations that the Fed will increase interest rates by 25 basis points at this month’s meeting in the money markets have decreased to 38 percent, while the final interest rate is expected to be at the level of 5.25-5.50 percent with an 85 percent probability.
Analysts noted that Friday’s non-farm employment data is expected to have an impact on pricing, adding that the Fed officials’ statements are also being followed closely.
At this month’s meeting, with the decline in the pricing for an interest rate hike, the ounce price of gold found support and carried its upward trend to the third day, while the barrel price of Brent oil rose by 1 percent to $73 in the new day, after losing more than 6 percent in value in the last two days.
Yesterday, the S&P 500 index fell 0.61 percent, the Nasdaq index fell 0.63 percent and the Dow Jones index 0.41 percent in the New York stock market. Index futures contracts in the USA started the new day with mixed movements.
Europe
While a sales-weighted course was prominent in Europe yesterday, eyes were turned to the inflation data to be announced in the Eurozone today.
According to the data released yesterday, annual inflation in Germany, which was 7.2 percent in April, fell to 6.1 percent in May, more than expected.
Similarly, inflation in France fell to 5.1 percent, the lowest level in a year, due to the decline in energy, food and service prices.
Despite the aforementioned developments, while the members of the European Central Bank (ECB) continued their “hawk” statements, ECB member Olli Rehn stated that the ECB would not consider a rate cut before the desired slowdown in core inflation occurs.
On the other hand, while the international credit rating agency Standard & Poor’s is expected to review France’s country rating today, it is stated that a possible downgrade may occur.
Yesterday, the DAX 40 index in Germany and the CAC 40 index in France decreased by 1.54 percent, the FTSE 100 index in the UK decreased by 1.01 percent and the MIB 30 index in Italy decreased by 1.97 percent. Index futures contracts in Europe started the new day with a sales-oriented course.
Asia
While a buying-heavy course stands out in Asian markets, excluding South Korea, optimism in the US that the debt limit crisis will be resolved in a timely manner and the data announced in China support this trend.
According to the data released today in China, the Caixin manufacturing industry Purchasing Managers Index (PMI) rose to 50.9, indicating expansion, while the manufacturing industry PMI in Japan fell to 50.6.
While the Nikkei 225 index in Japan increased by 0.8 percent, the Shanghai composite index in China increased by 0.3 percent and the Hong Kong Hang Seng index increased by 0.8 percent, the Kospi index in South Korea decreased by 0.3 percent.
Domestic markets
BIST 100 index in Borsa Istanbul, which followed a sales-weighted course in the domestic market yesterday, finished the day at 4,886.91 points, 1.30 percent below the previous closing.
Dollar/TL is trading at 20,7750 at the opening of the interbank market today, after closing at 20,7995 with an increase of 1.6 percent yesterday.
Analysts stated that today, the intense data agenda will be followed, especially the manufacturing industry PMI and ADP private sector employment data in the USA, and noted that technically, the 5,000 and 5.200 levels in the BIST 100 index are resistance and 4.800 points are in the support position.
The data to be followed in the markets today are as follows:
10.00 Türkiye, manufacturing industry PMI for April
10.55 Germany, May manufacturing PMI
12.00 Euro Zone, CPI for May
12.00 Eurozone, unemployment rate for April
14.00 Türkiye, CBRT Monetary Policy Committee meeting summary
14.30 Eurozone, ECB Monetary Policy Committee meeting minutes
15.15 USA, May ADP private sector employment
15.30 US, weekly jobless claims
17.00 USA, May ISM manufacturing PMI
