Global markets followed a buying-heavy course with the strengthening of expectations that the Fed’s interest rate hikes might come to an end.

While inflation concerns, which have been affecting asset prices for a while, have gradually subsided, the labor market data released in the USA show that the slowdown in the labor market is accelerating.

Analysts stated that the recently announced data strengthened the predictions that the Fed would not raise interest rates for the rest of the year.

While the verbal guidance of Fed officials regarding future policies is also in the focus of investors, Atlanta Fed President Raphael Bostic stated that monetary policy is tight enough to reduce inflation to 2 percent in a reasonable time.

Bostic also emphasized that policy makers should be careful not to over tighten quantitative easing.

The positive effects of the US Federal Reserve (Fed) Chairman Jerome Powell’s speech at the Jackson Hole Economic Policy Symposium on August 25, stating that hawkish steps will be taken much more carefully continue to have positive effects on global markets.

While a buying weighted course was followed in the bond markets, the US 10-year bond yield was stabilized at 4.18.

In the commodity market, the ounce price of gold increased by 1.3 percent to $ 1,940, and the barrel price of Brent oil increased by 5.4 percent to $ 88.7.

Fed’s Beige Book Report to be followed in the US

Stock markets in the USA followed a positive course after the macroeconomic data announced last week.

According to the data announced in the USA, the core personal consumption expenditures price index, which excludes food and energy items, which the Fed considers as inflation indicators, increased by 0.2 percent monthly and 4.2 percent annually, in line with market expectations.

In the country, the number of people who applied for unemployment benefits for the first time decreased to 228,000 in the week ending August 26, below market forecasts.

In the US, the number of JOLTS Jobs vacancies recorded 8 million 827 thousand in July, the lowest level since March 2021, while private sector employment increased by 177,000 in August, below market expectations.

In the country, non-farm employment increased by 187,000 in August, above expectations, while the unemployment rate rose to 3.8 percent, the highest level since February 2022.

Average hourly earnings, which the Fed watches closely, also increased by 0.2 percent, below market expectations.

While the second quarter growth data of the US economy was revised from 2.4 percent to 2.1 percent, the policy rate was fixed at the Fed’s September meeting in the pricing of money markets after the data showing that the country’s economy grew less than expected in the second quarter and employment growth slowed more than expected. Expectations that it will keep up are 93 percent.

Analysts stated that despite the increase in the non-farm employment data in the USA, the rise in the unemployment rate in the country revealed that the slowdown in the employment market still continues, and drew attention to the fact that the possibility that the Fed’s interest rate hike cycle may have ended.

Last week, the S&P 500 rose 2.37 percent, the Dow Jones index rose 1.43 percent and the Nasdaq index rose 3.25 percent in the New York stock exchange.

In the week starting September 4, factory orders on Tuesday, Fed’s Beige Book Report on Wednesday, foreign trade balance, services sector Purchasing Managers Index (PMI), ISM services sector PMI, weekly unemployment benefits applications on Thursday, wholesale stocks on Friday will be followed. .

In Europe, eyes will be on Eurozone growth data

While a buying-heavy trend was prominent in the European stock markets last week, the inflation and recession dilemma persists in the region. Although data on economic activity across the region show signs of slowing down, members of the European Central Bank (ECB) continue their “hawk” comments.
ECB Member Robert Holzmann stated that the bank should raise interest rates again in September as part of the fight against inflation.

According to the data released in Germany, the Consumer Price Index (CPI) increased by 6.1 percent annually, leaving expectations behind, while uncertainties regarding the European Central Bank’s (ECB) future policies continued to gain strength.

The minutes of the European Central Bank’s (ECB) monetary policy meeting for July revealed that members of the ECB Governing Council were more concerned about inflation not returning to the target than if the economy was in a recession. In the minutes, it was stated that the risk of stopping the tightening in monetary policy too early is still high.

Last week, FTSE 100 index gained 1.72 percent in England, CAC 40 index gained 0.93 percent in France, DAX index gained 1.33 percent in Germany and MIB 30 index gained 1.56 percent in Italy.

Next week on Tuesday in the Eurozone, Germany and the UK services PMI, the Producer Price Index in the Eurozone, factory orders in Germany on Wednesday, retail sales in the Eurozone, growth in the Eurozone on Thursday, Germany Industrial production will be followed in Germany on Friday, followed by the Consumer Price Index.

Positive weather from China was effective in Asian markets

While the positive atmosphere originating from China is effective throughout the region in Asian markets, steps continue to be taken by the government to support the economy. Chinese Finance Minister Liu Kun stated that they will strengthen their policy support, while the developments on the subject are closely followed by the investors.

According to data released in China, the Caixin manufacturing industry PMI surpassing expectations with 51.0 increased confidence in economic activity, while the People’s Bank of China (PBoC) announced that it would cut reserve requirements to stimulate the economy, the main factors supporting the stock markets up. it happened.

Shares in finance and real estate saw gains after the PBoC announced it would cut the FX reserve requirement for financial institutions by 200 basis points, from 6 percent to 4 percent.

The reduction of the prepayment rate to 20 percent for first-time home buyers and 30 percent for second home buyers in the country was also welcomed by the struggling construction industry.

The possibility that Country Garden, one of China’s largest real estate companies, could default, caused concern in Asian markets.

In addition, Fitch Ratings, the international credit rating agency, reported that its 2023 growth forecast for the Chinese economy was reduced from 5.6 percent to 4.8 percent.

While the unemployment rate in Japan rose to 2.7 percent, analysts stated that the situation in question was negative for the Bank of Japan’s (BoJ) normalization plans.
In the country, retail sales increased by 6.8 percent in July, above expectations, while industrial production decreased by 2 percent.

On the other hand, Hong Kong’s Hang Seng index was closed due to Super Typhoon Saola.

With these developments, the Nikkei 225 index in Japan was 3.44 percent, the Shanghai composite index in China was 2.26 percent, the Hang Seng index in Hong Kong was 2.37 percent and the Kospi index in South Korea was 1.76 percent on a weekly basis. won.

Next week, service sector PMI in China will be followed on Tuesday, foreign trade balance on Thursday, growth and foreign trade balance in Japan on Friday.

Domestic markets focused on inflation data

In the domestic market, the BIST 100 index gained 4.40 percent last week, closing at 8,056.12 points, the highest daily and weekly closing of all time, and brought its highest level record to 8,060.92 points.

In the Monetary Market Board (MPK) meeting summary published by the Central Bank of the Republic of Turkey (CBRT), it was emphasized that selective credit and quantitative tightening decisions will continue to be taken to support the monetary tightening process.

International credit rating agency Moody’s raised its growth forecast for the Turkish economy this year from 2.6 percent to 4.2 percent and from 2 percent to 3 percent next year.

On the other hand, the Capital Markets Board (CMB) approved the initial public offering of Gıpta Ofis Stationery and Promotional Products Manufacturing Industry at 20.90 liras and Tarkim Plant Protection Industry at 107.50 liras.

In addition, according to the communiqué published in the Official Gazette, the CBRT increased the discount interest rate to be applied in rediscount transactions against promissory notes with a maximum maturity of 3 months, to 25.75 percent annually.

Next week, inflation on Monday, CPI-based real effective exchange rate on Tuesday, treasury cash balance on Thursday, and Fitch Ratings’ expected Turkey evaluation on Friday will be followed.

Dollar/TL, on the other hand, closed the week at 26.7144 with an increase of 1.36 percent.

Analysts noted that technically, the 8,200 level in the BIST 100 index is the resistance, and the 7,900 and 7,750 points are the support.

Economists participating in the Inflation Expectation Survey expect the Consumer Price Index (CPI) to increase by 7.32 percent in August.

According to the average of economists’ August inflation expectations (7.32%), annual inflation, which was 47.83 percent in the previous month, is calculated to rise to 56.37 percent.

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