While the data announced in the USA last week pointed out that the softening in the labor market continued, the fact that the country’s inflation was below expectations stood out as the main factors that increased the risk appetite in the equity markets.
While the Consumer Price Index (CPI) in the USA remained unchanged on a monthly basis in October, it increased by 3.2 percent on an annual basis. The expectation was that it would increase by 0.1 percent monthly and 3.3 percent annually. Annual inflation in the country was at 3.7 percent last month.
Analysts stated that it is certain that the Fed will keep the interest rate constant at the December meeting, based on the pricing in the money markets, and that it is estimated that the bank will start reducing interest rates in June with an 85 percent probability.
Analysts stated that the verbal guidance of Fed officials that it was too early to “declare victory” in the fight against inflation had relatively dampened the risk appetite in the markets, and that the officials also stated that they did not expect a recession.
Last week, increases in precious metals stood out. Gold completed the week with a gain of 2.2 percent, silver with a gain of 6.8 percent, and platinum with a gain of 6.8 percent. Palladium, which had fallen sharply in previous weeks, also increased by 9.4 percent last week.
Analysts are of the opinion that increasing expectations that the Fed has come to an end in interest rate hikes after inflation slowed down more than expected in the USA, supported the prices of precious metals, especially gold.
Looking at base metals, copper increased by 3.9 percent and lead by 4.4 percent last week, while aluminum decreased by 1.4 percent, nickel by 2.3 percent and zinc by 0.5 percent. Although hopes for copper demand increased as predictions that the Fed’s monetary policy may have come to an end gained strength, concerns that signals of a slowdown in economies could turn into the possibility of a recession affected some metals.
CARRIED ITS DECLINE TREND TO THE 4TH WEEK
There were sharp declines in energy commodities last week. The barrel price of Brent oil, which fell to the lowest level in the last 4 months by testing $ 76.7, completed the week at $ 80.5 with a decrease of 1.2 percent, and continued its downward trend for the fourth week in a row. Natural gas traded on the New York Mercantile Exchange also lost 2.4 percent in value last week.
While concerns about global oil demand continue, developments regarding the US and Chinese economies lead to concerns about the global oil demand outlook and put downward pressure on prices.
Concerns about whether the increasing signs of slowdown in the US economy will turn into a recession remain in the markets.
October economic indicators announced in China, the world’s largest oil importer and second largest oil consumer, reveal that the difficulties in recovery after Covid-19 continue in the fields of production, consumption, investment and employment.
COCOA REFRESHED THE SUMMIT
Last week, wheat traded on the Chicago Mercantile Exchange increased by 0.4 percent, corn by 4.6 percent, and rice by 4 percent, while soybeans decreased by 0.3 percent.
While cotton traded on the Intercontinental Exchange, the commodity exchange operating in the USA, gained 1.7 percent and cocoa 2.5 percent, coffee lost 2.1 percent and sugar lost 0.3 percent. Cocoa renewed its record with $4,127.
Following the meeting between US President Joe Biden and Chinese President Xi Jinping, signs of softening in bilateral relations caused an increase in corn and cotton prices.
Rice prices also increased due to concerns that rice production will decrease in the Far East and high demand.
Sugar prices lost value with the decrease in oil prices. Sugar cane is one of the raw materials used for ethanol production. Therefore, the change in oil prices causes producers to prefer sugar or ethanol production.
Analysts expect coffee trees to bloom and yield to increase with the expectation of rainfall in South America.
While cocoa supply concerns in West Africa continue, concerns are increasing that this situation may increase the costs of the chocolate industry in the region after the European Parliament (EP) approved the law banning the import of products produced by damaging forests to European Union (EU) countries.