Uncertainties regarding the economic trajectory of the world’s two largest economies, the USA and China, located on both sides of the Pacific Ocean, continue to complicate pricing.
It was noteworthy that the Fed’s July meeting minutes announced on weekdays pointed out that inflation is still well above the Bank’s long-term target.
It is stated in the minutes that most participants continue to see significant upside risks that may require further tightening of monetary policy due to the tightness of the labor market.
Analysts stated that the Fed is predicted to leave the policy rate unchanged with a 90 percent probability next month in the pricing of the money markets, and stated that the uncertainties regarding the other two meetings to be held until the end of the year remain strong.
While Fed officials continued to give mixed signals in their statements throughout the week, Minneapolis Fed Chairman Neel Kashkari noted that he was pleased with the progress but the inflation rate was still high.
Stating that the bank is far from a rate cut, Kashkari said that they need to see the data to decide whether to increase the rates further.
With these developments, the selling pressure in the bond markets continued as a result of the inflation being still well above the targeted level, while the 10-year bond yield of the USA, which carried the upward trend for the 6th consecutive business day, approached the peak of the last 16 years with 4.30 percent.
The barrel price of Brent oil, which ended the 6-week upward trend, closed the week with a decrease of 2.1 percent at $ 84.4. The ounce price of gold fell 1.3 percent to $ 1,888.
USA locked in Jackson Hole
While the US stock markets followed a negative course this week, eyes were turned to the speech of Fed Chairman Jerome Powell at the Jackson Hole Economic Policy Symposium.
In the symposium, which has been organized by the Kansas City Fed since 1978 and attended by central bank governors, finance ministers and academics from around the world, the current global economic situation is generally discussed, while evaluations on the future of monetary policy and guidance on possible policy steps draw attention.
In Powell’s statements, while clues about the possible monetary policy steps of the Fed are expected, it is estimated that these statements may increase the volatility in the markets.
On the other hand, Bitcoin, which has been moving in an upward trend since the beginning of the year and making its investors smile, fell hard with the news flow that SpaceX may have sold the Bitcoins it held last week.
News-driven volatility continues in the cryptocurrency market. The price of Bitcoin, the largest cryptocurrency, has lost about 13.1 percent in the last 2 days.
Analysts stated that the news flow about the sale of Bitcoins among the assets of SpaceX company under the management of Elon Musk was effective in the fall, and the fact that the Chinese real estate giant, Evergrande, filed for protection from creditors in the bankruptcy court in New York, also caused concern in the markets. reported the cause.
With these developments, the S&P 500 index lost 2.13 percent on a weekly basis, the Nasdaq index lost 2.59 percent and the Dow Jones index lost 0.19 percent.
In the data calendar for the week starting August 28, used home sales and Richmond Fed industrial index on Tuesday, manufacturing, services and composite Purchasing Managers Index (PMI) on Wednesday, Chicago national activity index and durable goods orders on Thursday, Michigan on Friday. consumer confidence index data will be followed
Chinese influence on European stock markets
While a sales-heavy trend stood out in the European stock markets last week, the negative news flow from China, the largest trading partner of the region, increased the risk perception.
While the fear of a recession, which is already strong in the region, is added to the fear that the economic activity in China will slow down further and negatively affect the production of the region, the fact that the Fed still has to go a long way in fighting inflation makes it difficult for investors to make decisions.
On the other hand, while the tight monetary policy process continued in England, annual inflation fell to the lowest level of the last 1.5 years. While annual inflation in the country was 6.8 percent in line with expectations, core inflation remained unchanged at 6.9 percent.
In the Eurozone, July inflation was 5.3 percent on an annual basis, in line with expectations.
While the expectations regarding the monetary policy of the European Central Bank (ECB) are starting to strengthen that the Bank may continue to increase interest rates in September, it is predicted that the ECB will increase interest rates by 25 basis points with a 60% probability in September, according to the pricing in the money markets.
The aforementioned price increases in the Eurozone, where the concerns of recession emerged in the regional economies on the one hand, and the inflation rate is still well above the target level, on the other hand, increased the uncertainties.
Last week, the FTSE 100 index in the UK decreased by 3.48 percent, the DAX index in Germany by 1.63%, the CAC 40 index in France by 2.40 percent and the MIB 30 index in Italy by 1.93 percent.
Next week, the Producer Price Index (PPI) in Germany will be followed on Monday, the manufacturing industry, services sector and composite PMI and Eurozone consumer confidence index in Germany, the Eurozone and the UK on Wednesday, and the growth data in Germany on Friday.
Asian stock markets fell
On the Asian side, stock markets followed a negative course this week amid ongoing concerns about economic activity in China.
While the increasing risk perception in China has brought the dollar/yuan parity to the peak of the last year, it is stated that the People’s Bank of China (PBoC) may have made the strongest intervention in its history through public banks to prevent the depreciation of the yuan.
While the number of companies that cannot pay their debts in the real estate sector is increasing day by day, the fact that some financial institutions of the country are experiencing similar problems causes an increase in risk perception.
While the economic activity, which is currently slowing down in the country, raises concerns, the announced company balance sheets do not give positive signals.
Accordingly, the revenues of Tencent Holding, one of China’s largest technology companies, fell short of expectations.
The possibility that the problems in the real estate sector in the country may spread to other areas of the economy are closely followed in the markets.
On the other hand, according to the pioneering growth data of Japan, the Japanese economy grew by 6 percent annually in the second quarter of the year, leaving the forecasts behind, while the Consumer Price Index (CPI) increased by 3.3 percent in July, in line with the expectations.
With these developments, the Nikkei 225 index in Japan was 3.15 percent, the Shanghai composite index in China was 1.8 percent, the Kospi index in South Korea was 2.12 percent and the Hang Seng index in Hong Kong was 5.8 percent on a weekly basis. lost.
The data calendar of the week starting from August 21 includes Tokyo CPI data to be announced in Japan on Friday.
Domestically, eyes turned to the CBRT’s interest rate decision
While the BIST 100 index in Borsa Istanbul closed the week at 7,513.29 points with a decrease of 2.61 percent last week, eyes were turned to the CBRT’s interest rate decision on Thursday.
Economists participating in AA Finans’ expectation survey regarding the CBRT Monetary Policy Committee meeting estimate that the one-week repo auction rate (policy rate) will be increased by 250 basis points to 20 percent.
International credit rating agency Moody’s reported that the outlook for the Turkish banking sector was upgraded from negative to stable. In the statement made by Moody’s, it was noted that the steps taken by the government to implement orthodox policies after the elections in May were supportive of the operating environment of Turkish banks.
In the statement of Moody’s, it is stated that the Turkish economy is expected to grow by 4.2 percent this year, while inflation is expected to be at 51 percent, “Despite the economic slowdown in the first half of this year due to the outlook in the European market, Turkey’s strong exports and tourism sectors will continue to support growth.” it was said.
Dollar/TL, on the other hand, completed the week at 27,1045 with an increase of 0.91 percent compared to the previous week’s closing.
Analysts noted that technically, 7.580 and 7.750 levels in the BIST 100 index are in the resistance position, and 7.500 and 7.400 points are in the support position.
Next week, domestic consumer confidence index on Wednesday, CBRT’s interest rate decision on Thursday, capacity utilization rate on Friday and real sector confidence index data will be followed.
