During the week, the Consumer Price Index (CPI) in the USA remained below market expectations with an increase of 0.2 percent on a monthly basis and 3 percent on an annual basis in June.
In the same period, the Producer Price Index (PPI) in the country was below the projections with an increase of 0.1 percent on a monthly and annual basis. Thus, producer inflation in the USA has fallen to the lowest level since 2020 on an annual basis.
Analysts said the data on producer prices provided further evidence that inflation in the US was falling and raised expectations that the US Federal Reserve will soon end its “hawk” policies. While this situation led to the reduction of the recession concerns that have been on the agenda for a long time in the USA, it also highlighted the possibility of a “soft landing” in the country’s economy.
After these developments, the Fed’s predictions that it might end its “hawk” steps after increasing the policy rate by 25 basis points this month strengthened in pricing in the money markets, while the possibility that the Bank might cut interest rates at the end of the year was also included in the pricing.
The statements of Fed officials are also being followed. San Francisco Fed President Mary Daly stated that interest rate hikes will be necessary to reduce high inflation in the country, adding, “It is too early to say that we have won a victory over inflation.” made its assessment. Daly had previously expressed his belief that two more rate hikes will be needed this year.
Chicago Fed President Austan Goolsbee said the latest data were “promising” even though inflation was still above the 2 percent target.
Known as one of the most “hawkish” Fed members, St. Louis Fed President James Bullard will step down next month. In a statement from the bank, St. Louis Fed’s first vice president and chief operating officer, Kathleen O’Neill Paese, has reportedly assumed the roles of interim president and CEO with immediate effect.
On the other hand, while purchases stood out in the bond markets last week, the US 10-year bond yields finished the week at 3.83 percent with a decrease of about 23 basis points.
The dollar index, which carried the downward trend for the second week in a row, finished the week at 99.9 with a decrease of 2.3 percent and fell below 100 for the first time since April 14, 2022.
While the price of ounce of gold closed the week at $1,956 with an increase of 1.6 percent, the price of Brent oil per barrel increased by 1.8 percent to $79.6 on the back of fears that the supply would remain below the demand and recession concerns in the USA, reaching the highest weekly close of the last 2.5 months. .
Nasdaq and S&P 500 index at highest level since April 2022
Stock markets in the USA followed a positive course as the inflation data announced in the country was below expectations last week, as the Fed expanded its policy area, while the intense data agenda and company financial results next week placed the focus of investors.
Analysts stated that the risk appetite has increased with the pricing that the Bank is approaching the end of its tightening monetary policies, and said that the ongoing balance sheet season in the USA may also increase the volatility based on stocks and sectors.
On the side of the US stock markets, in the court where the US Federal Trade Commission (FTC) applied to prevent Microsoft from acquiring computer game developer Activision Blizzard, it was decided in favor of Microsoft.
Bank of America, the country’s second-largest bank, reportedly will pay $250 million over accusations of making illegal fees, withholding credit card rewards and opening fake accounts.
In the balance sheet season that started last week, the net profits of JPMorgan Chase and Wells Fargo, one of the largest US banks, increased in the second quarter of this year compared to the same period of the previous year, while the profit of Citigroup decreased.
According to the macroeconomic data announced, the consumer confidence index measured by the University of Michigan in the USA rose to 72.6 in July, reaching its highest level since September 2021.
There have also been important developments on the crypto money markets side. The “securities” lawsuit filed for XRP in the US has been concluded in favor of Ripple. After the decision, XRP increased by more than 70 percent, closing the week with a 50 percent gain.
Changpeng Zhao, Chief Executive Officer (CEO) of Binance, known as the largest cryptocurrency exchange, stated that the company made involuntary layoffs to increase its talent density, regarding the news of the layoffs in the media, the numbers in the news are incorrect and they are still recruiting.
With these developments, the Nasdaq index in the New York stock exchange rose by 3.32 percent and the S&P 500 index rose by 2.30 percent, to its highest level since April 2022. The Dow Jones index finished the week with an increase of 1.96 percent.
In the data calendar of the week, which starts on July 17, industrial production and retail sales will be followed on Tuesday, and weekly unemployment claims will be followed on Thursday.
Europe focused on inflation data
While the buying-heavy trend was prominent in the European stock markets last week, the eyes were turned to the statements of the European Central Bank (ECB) President Christine Lagarde and the inflation data to be announced in the region next week.
In the summary of the June monetary policy meeting of the European Central Bank (ECB), which was announced last week, signals were given that interest rate hikes would continue. In the summary, it was stated that the Bank may consider increasing the interest rates after the July meeting if necessary, and it was noted that data-oriented decisions will be taken in the future as well.
The persistence of the inflation pressure in Europe compared to the USA and the prominent “hawk” tones in the summary of the ECB June monetary policy meeting caused the euro/dollar parity to make its strongest weekly rise since November 2022 with an increase of approximately 2.4 percent. it happened.
While the NATO Leaders’ Summit held in Lithuania’s capital Vilnius last week was the focus of the agenda, it was emphasized in NATO’s Vilnius Summit statement that combating terrorism in all its forms and manifestations is essential for common defense.
According to the announced macroeconomic data, while the CPI in Germany increased by 6.4 percent on an annual basis, in line with the expectations, industrial production in the UK fell by 0.6 percent on a monthly basis in May, below the forecasts.
On the other hand, while the ECB is expected to raise interest rates by 25 basis points at this month’s meeting, it is expected that the Bank will increase interest rates by 50 basis points in total until the end of the year.
With these developments, the DAX index in Germany gained 3.22 percent, the FTSE 100 index in the UK by 2.45 percent, the CAC 40 index in France by 3.69 percent and the MIB 30 index in Italy by 3.19 percent.
Next week, ECB President Lagarde’s statements on Monday, inflation in the UK and the Eurozone on Wednesday, PPI in Germany on Thursday and retail sales in the UK on Friday will be followed.
In Asia, eyes are on PBoC’s interest rate decision
While a positive trend was observed in Asian stock markets last week, the policy rate decision of the People’s Bank of China (PBoC) and inflation data in Japan will be followed next week.
Recalling that the Chinese authorities increased the pressure on banks to ease the conditions of real estate companies by encouraging negotiations to extend the outstanding loans, the analysts said that the news flow that the Chinese government will support different areas of the economy continues to be in the focus of investors.
Last week, the Central Bank of New Zealand, one of the regional central banks, increased interest rates in all 12 meetings it held since October 2021, keeping the benchmark interest rate unchanged at 5.50% for the first time in line with market expectations. In the statement made by the bank, it was stated that the current policy rate is sufficient to suppress inflation.
The South Korean Central Bank kept the policy rate unchanged at 3.50 percent. Thus, the Bank did not change the interest rates in 4 consecutive meetings.
On the other hand, Michele Bullock, who serves as Vice-President of the Reserve Bank of Australia, replaced Philip Lowe.
According to the data released during the week, inflation in China decreased by 0.2 percent on a monthly basis in June, while it remained unchanged on an annual basis. In the same period, the PPI decreased by 5.4 percent on an annual basis, more than expected.
While industrial production in Japan fell by 2.2 percent on a monthly basis in May, it was below the expectations, while the capacity utilization rate fell by 6.3 percent in the same period, far from the projections.
With these developments, Shanghai composite index in China gained 1.29 percent, Hang Seng index in Hong Kong increased by 5.71 percent and Kospi index in South Korea gained 4 percent on a weekly basis.
While the Nikkei 225 index in Japan completed the week with a horizontal course, the dollar/yen parity, which carried the downward trend for the second week in a row, closed the week at the lowest level of the last 2 months with a decrease of 2.3 percent.
In the week starting from July 17, growth, industrial production and retail sales in China will be followed on Monday, and CPI data will be followed in Japan on Friday.
Domestic eyes on the CBRT’s interest rate decision
Domestically, the BIST 100 index broke a record this week in Borsa Istanbul, while the next week, eyes were turned to the CBRT’s interest rate decision on Thursday.
Economists participating in the expectations survey of AA Finans predict that the CBRT will increase the one-week repo auction rate (policy rate) by 500 basis points to 20 percent.
This week, the BIST 100 index in Borsa Istanbul rose by 4.05 percent to 6,437.74 points, breaking a weekly closing record, and reaching its highest level of 6,446.01. Dollar/TL also gained 0.50 percent on a weekly basis and rose to 26.1923.
According to the macroeconomic data announced this week, unemployment was 9.5 percent in May, while the current account account posted a deficit of 7 billion 933 million dollars in the same period.
According to the CBRT’s Market Participants Survey released on Friday, the current year-end CPI expectation was 43.82 percent.
On the other hand, last week, the Capital Markets Board (CMB), Kaleseramik, Çanakkale Kalebodur Seramik Industry from 25 lira per share, Atakey Potato Gıda Sanayi ve Ticaret from 39.50 lira per share, Fuzul Gayrimenkul Yatırım Ortaklığı from 8 lira per share. Approved the initial public offering of 90 liras.
Analysts stated that the consumer confidence index and the CBRT’s policy rate decision will be followed on Thursday next week, and noted that, technically, 6,500 and 6,600 levels in the BIST 100 index are resistance and 6,300 and 6,200 points are support.