Markets focused on the intense data agenda – Last Minute Economic News

While a negative trend is observed in global markets this week, as predictions that the Fed will not rush to reduce interest rates grow stronger, next week will follow an intense data agenda.

Uncertainties regarding the timing and size of the Fed’s interest rate cuts continue to dampen the risk appetite in equity markets.

Following the macroeconomic data announced in the USA this week, a negative trend was observed in global markets, as predictions that the Fed would not rush to reduce interest rates grew stronger.

Analysts stated that stronger-than-expected inflation data reduced hopes that the Fed would start interest rate cuts in June.

Following the inflation data announced in the USA, the pricing in the money markets is certain that the Fed will leave the policy rate constant at the May meeting, while the probability of the first interest rate cut has decreased to 27 percent for June.

US President Joe Biden also stated that inflation data from March may delay the Fed’s start of interest rate cuts. Biden stated that he remained loyal to his expectation that the interest rate cut would occur before the end of the year, but that there might be a delay, and said, “We do not know for sure what the Fed will do.”

On the other hand, the minutes of the Fed’s last meeting revealed that bank officials were of the opinion that the latest data did not increase confidence that inflation would drop to 2 percent sustainably.

The statements of Fed officials also had an impact on the direction of the markets.

While New York Fed President John Williams stated that there is no need for an interest rate cut in the near term, Boston Fed President Susan Collins stated that fewer interest rate cuts may be necessary this year. Richmond Fed President Thomas Barkin stated that the latest data did not increase confidence that price pressures across the economy were easing on a broader basis.

With these developments, the US 10-year bond rate completed the week with an increase of 10 basis points at 4.5100.

The ounce price of gold, which reached a record level of 2 thousand 431.5 dollars due to geopolitical risks arising from tension in the Middle East, completed the week with an increase of 0.5 percent.

The barrel price of Brent oil decreased by 1 percent to 89.7 dollars this week.

A NEGATIVE COURSE WAS OBSERVED IN THE NEW YORK STOCK EXCHANGE

A negative trend was observed in the New York stock exchange due to concerns about inflation and geopolitical tensions and the impact of the first quarter balance sheets announced by some major US banks.

According to the balance sheets announced in the USA, JPMorgan Chase’s net profit increased by 9 percent in the first quarter of the year, while Citigroup and Wells Fargo’s net profit decreased by 27 percent and 7 percent, respectively.

On the other hand, in the USA, the Consumer Price Index (CPI) was above market expectations with an increase of 0.4 percent on a monthly basis and 3.5 percent on an annual basis in March.

Core CPI, which does not include variable energy and food prices, increased by 0.4 percent monthly and 3.8 percent annually in March, as in February. Market expectations were that the core CPI would increase by 0.3 percent on a monthly basis and 3.7 percent on an annual basis in March.

In the country, the Producer Price Index (PPI) was below expectations, with an increase of 0.2 percent on a monthly basis and 2.1 percent on an annual basis in March.

Analysts stated that although the increase in producer prices, which were below expectations following stronger-than-expected consumer inflation data, alleviated investors’ concerns about inflation to some extent, the views in the markets that the Fed would not rush to reduce interest rates remained strong.

With these developments, the Nasdaq index in the New York Stock Exchange lost 0.67 percent, the Dow Jones index lost 2.37 percent and the S&P 500 index lost 1.56 percent.

Next week, retail sales will be followed on Monday, industrial production housing starts and construction permits on Tuesday, the Fed’s “Beige Book” report on Wednesday, and weekly unemployment applications and second-hand home sales on Thursday.

EUROPEAN STOCK EXCHANGES WERE NEGATIVE EXCEPT FOR UK

European stock markets followed a sales-oriented trend following the interest rate decision of the European Central Bank (ECB).

The ECB kept the 3 main policy rates constant in line with market expectations.

In the statement made by the ECB regarding the monetary policy decision, it was stated that the Bank kept the refinancing rate constant at 4.50 percent, the deposit rate at 4 percent and the marginal funding rate at 4.75 percent.

Thus, at the third meeting of the year regarding monetary policy, the 3 main policy rates were kept constant for the fifth consecutive time, while interest rates continued to remain at the highest level in the history of the euro.

ECB President Christine Lagarde said that they would not wait for all elements of inflation to fall to 2 percent to decide to reduce interest rates.

On the other hand, the Consumer Price Index (CPI) in Germany was 0.4 percent monthly and 2.2 percent annually in March, within expectations. The British economy grew by 0.1 percent in February, in line with expectations.

Tight financing conditions in the Eurozone significantly reduced demand for corporate loans in the first quarter of the year, according to the ECB credit survey. The shrinking of the ECB’s balance sheet has a negative impact on banks’ liquidity and financing conditions.

The investor confidence index in the euro area increased for the sixth consecutive month in April, reaching its highest level since February 2022 at minus 5.9.

With these developments, this week the DAX index in Germany lost 1.35 percent, the MIB 30 index in Italy lost 0.72 percent, the CAC 40 index in France lost 0.63 percent, while the FTSE 100 index in the UK lost 1.07 percent. won.

Next week, industrial production in the Eurozone will be monitored on Monday, unemployment rate in the UK and ZEW indices in Germany on Tuesday, inflation in the Eurozone and the UK on Wednesday, PPI in Germany and retail sales in the UK on Friday.

ASIAN MARKETS WERE NEGATIVE EXCEPT JAPAN

A mixed trend stood out in Asian stock markets this week.

Bank of Japan (BoJ) Governor Kazuo Ueda said, “If exchange rate movements have an undeniable impact on the economy and prices, we will of course respond with monetary policy.” said.

Ueda also said that if the inflation trend continues to increase, the bank should consider reducing the degree of monetary stimulus.

Dollar/yen parity reached its highest level in 34 years at 153.

Making a statement on the issue, Japanese Finance Minister Shunichi Suzuki stated that they analyzed the background of foreign exchange movements and that they would not hesitate to intervene to minimize the impact of the weak yen on households.

Analysts stated that the weakening yen will affect the timing of the Bank of Japan’s interest rate increase, and the next interest rate increase may be delayed until the autumn.

According to data announced in Japan, industrial production decreased by 0.6 percent monthly in February, and capacity utilization rate decreased by 0.5 percent.

In Japan, the balance of payments in February was below expectations at 2.6 trillion yen. The country’s Producer Price Index (PPI) for March increased by 0.8 percent monthly, within expectations and continued its rise for the third month.

Industrial production in the country also decreased by 0.6 percent monthly in February, and capacity utilization rate decreased by 0.5 percent.

On the other hand, international credit rating agency Fitch Ratings confirmed China’s credit rating as ‘A+’ and reduced its credit rating outlook from stable to negative.

In the country, CPI decreased by 1 percent monthly and increased by 0.1 percent annually in March. PPI decreased by 2.8 percent annually.

Analysts said that after the weak inflation data announced in China, the possibility that the Chinese government will continue its incentive packages to stimulate economic activity is highlighted.

With these developments, the Nikkei 225 index in Japan gained 1.36 percent in value on a weekly basis, while the Shanghai composite index in China increased by 1.62 percent, the Kospi index in South Korea increased by 1.19 percent, and the Hang Seng index in Hong Kong increased by 0.01 percent. lost value.

Next week, growth, industrial production and retail sales will be followed in China on Tuesday, foreign trade balance in Japan on Wednesday, and inflation in Japan on Friday.

DOMESTIC, EYES ARE TURNED TO BALANCE OF PAYMENTS DATA

Domestically, Borsa Istanbul’s BIST 100 index completed the week with an increase of 2.03 percent at 9,814.19 points, achieving the highest daily and weekly closing of all time, and broke its highest level record to 9,849.26 points. Dollar/TL finished the week at 32.3613, 1.02 percent above the previous close.

Last week, due to the eve of Eid al-Fitr, trading took place in the domestic markets for 1.5 days.

The World Bank predicted that the Turkish economy will grow by 3 percent this year and 3.6 percent next year.

In its forecasts in January, the bank predicted that the Turkish economy would grow 3.1 percent this year and 3.9 percent next year.

The report stated that macroeconomic consolidation efforts are expected to restrict domestic demand.

The bank’s report stated, “While inflation is expected to decline gradually after peaking in May due to the tight monetary policy, the current account balance is expected to improve as of 2024 with the increasing contribution of net exports.”

The report stated that the outlook depends on the continuation of the current policy stance, and noted that the risks to the outlook are balanced.

The increased credibility of the new economic administration could result in greater investment inflows, which could help stabilize the currency and accelerate economic regulation, the report said.

Next week, labor force statistics will be followed on Monday, balance of payments on Wednesday, and market participants survey on Friday.

Analysts noted that technically, the 9,900 and 10,000 levels in the BIST 100 index stand out as resistance, and that 9,700 and 9,600 points are in a support position.