Nvidia impact in global markets

Nvidia impact in global markets

Technology companies operating in the field of semiconductor chips and artificial intelligence had an impact on the direction of the markets, led by Nvidia.

Nvidia exceeded estimates by making a net profit of $12.29 billion in the last quarter, an annual increase of 769 percent.

After announcing profits above expectations in the last quarter, the company’s share price finished last week with a 9 percent increase. Nvidia’s share price rose to $823.94. Thus, the market value of the company exceeded 2 trillion dollars for a while.

On the other hand, while uncertainty continues about when the US Federal Reserve (Fed) will start reducing interest rates, the Federal Open Market Committee (FOMC) meeting minutes published last week showed that officials are concerned about rapid loosening of monetary policy.

The minutes included information that Fed officials focused on the possibility that further progress in reducing inflation might take longer than expected.

In the minutes, where Fed officials underlined the uncertainty about how long the restrictive monetary policy stance should be continued, “Most officials pointed out the risks of moving too quickly to loosen the policy stance and used incoming data when deciding whether inflation had fallen sustainably to 2 percent.” “He emphasized the importance of careful evaluation. However, several officials stated that maintaining an overly restrictive stance for too long points to downside risks to the economy.”

While it is certain in the money markets that the Fed will keep the interest rate constant in March, the probability that the Fed will start reducing interest rates in May has decreased to 25 percent and the probability of starting it in June has decreased to 67 percent.

FED FORECAST FROM S&P

In addition, international credit rating agency Standard & Poor’s stated that it did not change its 2024 outlook for the US monetary policy, and that it predicts that the Fed will reduce the policy rate by 25 basis points at the June meeting and by 75 basis points by the end of the year.

The statements of Fed officials were also followed closely last week. While Richmond Fed President Thomas Barkin emphasized that price pressures continue in sectors such as housing despite the decrease in headline inflation, Fed Board Member Michelle Bowman expressed that she is against the possibility of an interest rate cut in the near future.

Fed Vice President Philip Jefferson pointed out that the Bank’s strong actions have moved the policy rate to a very restrictive region, and stated that the tight stance in monetary policy puts downward pressure on economic activity and inflation.

Jefferson stated that if the economy generally develops as expected, it would probably be appropriate to start reducing the policy rate at the end of the year, but said that he could not give a timetable due to risks.

Philadelphia Fed President Patrick Harker also stated that there is a risk if the Fed lowers interest rates too early.

Stating that the Fed is in the last step of progressing towards the 2 percent inflation target, Harker said that the latest data show that there is an uneven progress in slowing down inflation.

International Monetary Fund Spokesperson Julie Kozack also stated that although inflation has slowed down, it is not yet close enough to the target, and called on central banks to be cautious against premature loosening of monetary policy.

While the developments in the Middle East continue to be the focus of investors, the barrel price of Brent oil completed last week at $80.9 with a decrease of 2.2 percent. The ounce price of gold increased by 1.2 percent to 2 thousand 36 dollars. However, the US 10-year bond rate completed the week at 4.2560 percent, with a decrease of 36 basis points. The dollar index also decreased by 0.3 percent to 103.9 last week.

HISTORICAL PEAKS WERE SEEN IN THE NEW YORK STOCK EXCHANGE

While companies in the field of artificial intelligence and semiconductors contributed to the movement of the indices, led by Nvidia, a positive trend was observed in the New York share markets last week.

The spacecraft named “Odysseus”, which was sent into space with the Falcon 9 rocket produced by SpaceX within the scope of the “IM-1” mission of the US-based company Intuitive Machines, landed on the Moon. Shares of the company, which carried out the first US Moon landing since 1972, gained more than 30 percent in value last week.

On the other hand, companies in the country continued to announce their financial results. Shares of Walmart, which reported profits and revenue above expectations in the fourth quarter last year, gained more than 3 percent last week, while the company will also acquire smart television maker Vizio for $ 2.3 billion in cash or $ 11.50 per share. announced.

The profits and revenues of Home Depot, one of the largest retail chains in the USA, in the last 3 months of last year exceeded expectations despite the decrease in sales, but the company’s total sales growth in the 2024 fiscal year was below expectations. Shares of Home Depot rose 3.2 percent last week.

On the macroeconomic data side, the number of people applying for unemployment benefits for the first time in the USA decreased by 12 thousand people to 201 thousand in the week ending February 17, recording the lowest level in 5 weeks.

The manufacturing industry Purchasing Managers Index (PMI) in the country increased by 0.8 points monthly in February, reaching 51.5, the highest level in 17 months, while the service sector PMI decreased by 1.2 points in February, falling to 51.3, the lowest level in 3 months.

Second-hand home sales in the USA increased by 3.1 percent in January, exceeding market expectations.

With these developments, last week the S&P 500 index gained 1.70 percent, the Dow Jones index gained 1.30 percent and the Nasdaq index gained 1.40 percent.

S&P 500 index reached its historical peak with 5,110.04 points, Dow Jones index with 39,282.28 points and Nasdaq index with 16,134.22 points.

In the week starting February 26, new home sales on Monday, Dallas Fed manufacturing industry activity index, durable goods orders on Tuesday, CB consumer confidence index, Gross Domestic Product (GDP), wholesale stocks on Wednesday, personal income and expenditures on Thursday. University of Michigan consumer confidence index data will be followed on Friday.

EUROPEAN STOCK EXCHANGES ARE POSITIVE EXCEPT UK

While European stock markets followed a buying-oriented trend last week, expectations that the European Central Bank (ECB) and the Bank of England (BoE) will start reducing interest rates in June continue.

The minutes of the ECB’s January monetary policy meeting revealed that ECB Governing Council members agreed that it was too early to discuss interest rate cuts.

Last year, the ECB suffered a loss for the first time since 2004 due to interest rate increases as part of the fight against inflation. According to the data announced last week, the Consumer Price Index (CPI) in the Eurozone decreased by 0.4 percent monthly in January, while it increased by 2.8 percent on an annual basis, in line with expectations.

According to the ECB’s Consumer Expectations Survey, the average inflation expectation of consumers in the Eurozone for 12 months increased from 3.2 percent to 3.3 percent.

BoE Governor Andrew Bailey also stated that it is not unreasonable for markets to expect interest rate cuts from the BoE this year.

It is noteworthy that construction production in the Eurozone increased by 0.8 percent in December compared to November and 1.9 percent compared to the same period of the previous year, while the number of new car sales in the EU market increased by 12.1 percent in January compared to the same month of the previous year, reaching 851. It reached 1,690.

On the German side, the government stated that it reduced the growth expectation, previously announced as 1.3 percent for this year, to 0.2 percent due to the impact of weak global demand, geopolitical uncertainties and high inflation. The German economy also shrank by 0.3 percent in the last quarter of 2023 compared to the previous quarter, due to the impact of high inflation reducing the purchasing power of households.

On the other hand, last week, the German Central Bank (Bundesbank) stated that foreign demand has weakened, consumers are cautious in their spending and increasing financing costs may continue to limit investments, and that the German economy may contract in the first quarter of this year after the last quarter of last year and enter a technical recession.

It was noteworthy that the share price of HSBC, one of the UK’s largest banks, decreased by more than 8 percent in the last quarter due to the decline in its pre-tax profit and the loss of value in its subsidiary, the Chinese financial institution.

Last week, while the FTSE 100 index in England lost 0.1 percent of its value, the DAX index in Germany gained 1.76 percent, the CAC 40 index in France gained 2.56 percent and the MIB 30 index in Italy gained 3.22 percent.

The DAX index in Germany reached a record level of 17,443.74 points, and the CAC 40 index in France reached a record level of 7,976.40 points.

Next week, consumer confidence index, real sector confidence index and economic confidence index in the Eurozone will be followed on Wednesday, unemployment rate and CPI in Germany will be followed on Thursday, manufacturing industry PMI, CPI and unemployment rate data will be followed in the Eurozone on Friday.

JAPAN RECORD IN ASIAN STOCK EXCHANGES

The increased risk appetite in futures markets following Nvidia’s financial results also carried over to Asian share markets.

The People’s Bank of China (PBoC) reduced the 5-year loan interest rate (LPR), which is considered the reference for real estate loans.

In order to stimulate the real estate market in the country, PBoC lowered the 5-year loan prime interest rate, which is the benchmark interest rate for housing loans in the monthly fix, above expectations.

PBoC reduced the 5-year loan interest rate by 25 basis points from 4.20 percent to 3.95 percent, while keeping the one-year loan interest rate constant at 3.45 percent. Markets expected the interest rate cut to be 10 basis points.

Analysts stated that volatility in the share markets increased after the interest rate decision, and that the increase in the transaction volume of various exchange-traded funds in the country gives a clue that state-backed funds continue to support the market.

On the other hand, according to data announced last week in Japan, it was noteworthy that exports exceeded expectations with an annual increase of 11.9 percent in January.

While the manufacturing industry Purchasing Managers Index (PMI) in the country fell to the lowest level since August 2020 at 47.2, the service sector PMI dropped to 52.5.

The Central Bank of South Korea kept the policy rate constant at 3.50 percent in its ninth meeting.

The dollar/yen parity, which carried its upward trend for the third week in a row, completed last week at 150.4 with an increase of 0.1 percent.

Following these developments, on a weekly basis the Nikkei 225 index in Japan increased by 1.59 percent, the Hang Seng index in Hong Kong increased by 2.36 percent, the Shanghai composite index in China increased by 4.85 percent and the Kospi index in South Korea decreased by 0.54 percent. gained value.

In Japan, the Nikkei 225 index reached 39,156.97 points last week, reaching its peak in 1989.

The data to be announced in Japan in the week starting on February 26th stands out. In Japan, CPI data will be announced on Tuesday, retail sales and industrial production data will be announced on Wednesday, and unemployment rate data will be announced on Friday.

DOMESTIC EYES ON GROWTH DATA

Domestically, Borsa Istanbul’s BIST 100 index, which carried its upward trend for the 8th week in a row last week, completed the week with an increase of 1.34 percent at 9,374.20 points, achieving the highest daily and weekly closing of all time.

The index broke its highest level record to 9,416.70 points. Dollar/TL completed the week at 31.0444, 0.65 percent above the previous close. Continuing its downward trend, Turkey’s 5-year credit risk premium (CDS) decreased to 287 basis points.

The Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (PPK) kept the policy rate, one-week repo auction interest rate, unchanged at 45 percent.

In the announcement made by the CBRT regarding interest rates, “The Board evaluated that the current level of the policy interest will be maintained until a significant and permanent decrease in the main trend of monthly inflation is achieved and inflation expectations converge to the predicted forecast range.” The statement was included.

Next week, domestic economic confidence index and foreign trade balance data will be followed on Wednesday, GDP data will be followed on Thursday, and manufacturing industry PMI data will be followed on Friday.

Economists participating in AA Finance’s expectation survey estimated that GDP increased by 3.97 percent in the 4th quarter of last year.

The average of economists’ growth expectations for the whole of 2023 was 4.40 percent, and the average of their growth expectations for the end of 2024 was 3.44 percent.

Analysts stated that in the BIST 100 index, technically 9,400 and 9,500 levels may stand out as resistance, while 9,300 and 9,200 points may stand out as support.



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