Dollar and gold focused on Fed decision

The fact that the Israeli-Palestinian conflict, which started on October 7, continues despite the reactions from all over the world, increases the risk perception in the markets, while the news flow on the issue continues to have an impact on the direction of the markets.

Analysts remind that it is certain that the Fed will keep the policy rate constant at 5.25-5.50 percent at the Fed’s monetary policy board meeting on Wednesday next week, and that the predictions that the bank will keep the interest rate constant until 2024 continue to remain strong. he emphasized.

Analysts emphasized the importance of the statements in the meeting text to be announced after the decision and stated that the statements made by Fed Chairman Jerome Powell after the meeting could increase volatility in the markets.

Analysts stated that non-agricultural employment and ADP private sector employment data, which are among the most important data that the Fed takes into consideration when making monetary policy decisions, may also give signals about what steps the bank will take in the future.

As the data announced last week, which followed the developments in the Middle East as well as the busy macroeconomic data calendar, showed that the US economy remained strong despite the Fed’s “hawkish” steps, concerns increased that the bank would keep the policy rate at higher levels for longer than expected.

The US economy grew by 4.9 percent on an annual basis in the third quarter of this year, exceeding expectations and recording its fastest growth since the last quarter of 2021.

Although consumption expenditures in the country increased above the forecasts with 0.7 percent in September, incomes increased less than the forecasts with 0.3 percent.

The core personal consumption expenditures price index, which the Fed considers as an inflation indicator and excludes food and energy items, increased by 0.3 percent on a monthly basis and 3.7 percent on an annual basis in the same period, in line with market expectations.

In its statement regarding the data in question, international credit rating agency Fitch Ratings stated that strong consumer spending and employment growth supported the economic growth of the United States, and global bond yields have increased significantly in recent months.

In the statement made by Fitch, it was emphasized that the increase in bond yields occurred despite signals from central banks that policy interest rates were approaching their peaks and clear evidence that the implemented monetary tightening was now putting pressure on credit growth.

On the other hand, the US 10-year bond interest, which reached the highest level of the last 16 years with 5.02 percent at the beginning of the week, decreased by approximately 18 basis points and completed the week at 4.84 percent, while the dollar index closed the week at 106.6 with a 0.4 percent increase on a weekly basis. .

While the lack of tension in the Middle East had a direct impact on commodity prices, the ounce price of gold, which carried the upward trend for the 3rd week in a row, completed the week at 2,005.9 dollars with an increase of 1.2 percent. Thus, an ounce of gold exceeded $ 2,000 for the first time in about 5 months.

SELLERS’ MOVEMENT WAS OBSERVED IN NEW YORK STOCK EXCHANGES

While the New York stock markets followed a negative course in a week in which intensive company balance sheets and macroeconomic data were followed in the USA, the Fed’s interest rate decision for the next week and Powell’s statements, as well as employment report data, became the focus of investors.

Analysts said that according to the signals received from the data announced in the country last week, the strong stance in the economy continues, while the announced company balance sheets give mixed signals.

The consumer confidence index measured by the University of Michigan in the country was revised upwards in October and exceeded expectations with 63.8.

New home sales in the USA exceeded expectations with 759 thousand. On the other hand, mortgage applications continued to remain at their lowest level since 1995, with the average interest rate for a 30-year mortgage (home loan) in the United States approaching 8 percent.

On the other hand, as the balance sheet season continues intensively in the country, Microsoft’s revenue increased by 13 percent on an annual basis during this period, reaching 56.5 billion dollars, and the company’s shares finished the week with a 1 percent increase.

Although the revenue of Alphabet, Google’s parent company, increased by 11 percent to 76.7 billion dollars, the company’s share price closed the week with a 9.8 percent decrease after its cloud unit failed to meet revenue expectations.

The company’s shares lost value after US aircraft manufacturer Boeing announced a loss of $1.6 billion in the third quarter and reduced its delivery forecasts for its 737 type aircraft for this year due to quality problems at its supplier Spirit AeroSystems. Thus, Boeing’s share price extended its downward trend to the 8th week in a row.

While Amazon’s net profit was $9.9 billion in the third quarter, the company announced a profit of $2.9 billion in the same period last year. With the effect of the good balance sheet, the company’s shares completed the week with a 2.1 percent gain in value.

In addition, after it was reported that JPMorgan Chase Chief Executive (CEO) Jamie Dimon and his family will sell 1 million shares in the bank starting from 2024, the bank’s shares lost 5.1 percent on a weekly basis.

With these developments, last week, the Nasdaq index in the New York Stock Exchange ended the week with a decrease of 2.62 percent, the S&P 500 index with a decrease of 2.50 percent and the Dow Jones index with a decrease of 2.14 percent.

In the data calendar for the week starting October 30, Dallas Fed manufacturing index on Monday, CB consumer confidence index on Tuesday, ADP employment report on Wednesday, manufacturing industry PMI, construction expenditures and Fed interest rate decision, as well as Powell’s statements and weekly unemployment benefit applications on Thursday. , factory orders, non-farm employment, unemployment rate and service sector Purchasing Managers Index (PMI) data will be followed on Friday.

NEGATIVE COURSE IN EUROPEAN EXCHANGES

In addition to the ongoing Russia-Ukraine war, tensions in the Middle East remain unabated, causing risk appetite to remain low in Europe, where concerns about economic activity prevail. Next week, the interest rate decision of the Bank of England (BoE) and inflation data across the region are in the focus of investors. will be.

Speaking at the press conference held in Athens, Greece, after the European Central Bank (ECB) left all 3 main policy interest rates constant last week, ECB President Christine Lagarde stated that the European economy is weak and that inflation is expected to remain at high levels for a very long time.

During the week, economists participating in the ECB Survey of Professional Forecasters predicted that eurozone inflation will only approach the ECB’s 2 percent target in 2025.

On the other hand, the leading PMI data announced across Europe remained below expectations and continued to give negative signals about economic activity, which also diminished the risk appetite in European stock markets.

While the developments in the Middle East were closely followed in the region, the concern that the conflicts might spread to larger areas and that energy prices, in particular, might start to rise again was another factor that supported the risk perception in Europe.

Analysts stated that, according to the pricing in the money markets, it is certain that the BoE will leave the policy rate constant on Thursday next week, and that the verbal guidance given by BoE Governor Andrew Bailey after the decision may cause volatility in the markets.

With these developments, last week the DAX index in Germany lost 0.75 percent, the CAC 40 index in France lost 0.31 percent, the MIB 30 index in Italy lost 0.25 percent and the FTSE 100 index in England lost 1.50 percent.

Next week, on Monday, growth and inflation in Germany, consumer confidence index in the Eurozone, growth and inflation in the Eurozone on Tuesday, manufacturing industry PMI in the UK on Wednesday, unemployment rate and manufacturing industry PMI in Germany on Thursday, Manufacturing industry PMI in the Euro Zone, BoE’s interest rate decision and Bailey’s statements, UK service sector PMI and unemployment rate data in the Euro Zone will be followed on Friday.

ASIAN MARKETS WERE MIXED

On the Asian side, as the Chinese and Hong Kong equity markets diverged positively after the Chinese government continued its steps to support the economy, all eyes turned to the monetary policy decision of the Bank of Japan (BoJ) next week.

Analysts stated that the purchase of the wealth fund in the stock markets in China helped the risk appetite to recover, and the decision to withdraw the stamp duty on stocks from 0.13 percent to 0.1 percent in Hong Kong was another factor supporting the risk appetite. told.

On the other hand, inflation data announced in Japan increased uncertainties regarding the decisions to be taken by the BoJ at the meeting to be held next week.

Analysts stated that recent news in the Japanese press stated that the BoJ may widen the yield curve target range and that the monetary policy decisions to be announced by the bank next week may increase volatility in the markets.

In the country, the Consumer Price Index (CPI) exceeded predictions with an increase of 3.3 percent and core CPI of 2.7 percent in October.

While Japan’s 10-year bond interest completed the week at 0.87 percent, which is close to the peak of the last 10 years, the dollar/yen parity closed the week at 149.6 after testing the highest level of the last year at 150.8.

With these developments, the Hang Seng index in Hong Kong gained 1.32 percent and the Shanghai composite index in China gained 1.16 percent on a weekly basis, while the Kospi index in South Korea increased by 3.04 percent and the Nikkei 225 index in Japan increased by 0.86 percent. recorded a decrease.

In the week starting October 30, industrial production, unemployment rate, BoJ interest rate decision in Japan on Tuesday, manufacturing industry and service sector PMI in China, Caixin manufacturing industry PMI in China on Wednesday, current account balance and Caixin in China on Friday. Service sector PMI data will be followed.

EYES ARE TURNED TO INFLATION DATA

Domestically, the BIST 100 index, which followed a fluctuating course last week, completed the week with an increase of 2.02 percent at 7,662.05 points, while next week, the Inflation Report of the Central Bank of the Republic of Turkey (CBRT) and the summary of the Monetary Policy Committee (PPK) meeting, as well as the inflation data, will be available to investors. came into focus.

Last week, the CBRT increased the policy rate by 500 basis points to 35 percent, in line with expectations.

In the announcement made by the bank, it was stated that the monetary transmission mechanism will continue to be strengthened with additional steps to increase the share of Turkish lira deposits, and that the transition of tax regulations to inflation has been significantly completed due to the cost-oriented pressures arising from wages and exchange rates that have been effective in the recent period.

According to the communiqué published in the Official Gazette, the CBRT introduced export credits and ease of application for companies’ access to credit within the scope of simplification, along with steps to increase the share of the Turkish lira in the banking system.

Dollar/TL completed the week at 28.1737, 0.7 percent above the previous close.

On the other hand, the Capital Markets Board approved the initial public offering of Tureks Turunç Madencilik İç ve Dış Ticaret at 10.97 lira per share.

Analysts stated that in the BIST 100 index, technically, 7,700 and 7,900 levels may stand out as resistance, while 7,600 and 8,400 points may stand out as support.

Next week’s domestic data agenda will include the economic confidence index on Monday, foreign trade balance on Tuesday, manufacturing industry PMI on Wednesday, inflation report, weekly money and bank statistics on Thursday, and inflation data on Friday.