Global markets follow a positive trend following central bank decisions

Throughout the week, as central banks announced their final monetary policy decisions of the year, expectations that interest rate cuts could begin next year increased due to signals regarding the upcoming period.

Following the US Federal Reserve's (Fed) decision to keep its policy rate unchanged on Wednesday, the European Central Bank (ECB) and the Bank of England (BoE) also left interest rates unchanged yesterday.

Risk appetite in global equity markets increased as the Fed signaled that it could begin interest rate cuts next year and as the released data supported hopes for a "soft landing" in the economy.

Analysts stated that markets are pricing in the possibility that the Fed could begin interest rate cuts earlier and faster next year, noting that the bank's projections anticipate three interest rate cuts in the coming year.

On the other hand, the Financial Stability Oversight Council in the US identified the use of artificial intelligence in financial services as an emerging vulnerability in the financial system for the first time this year.

In money market pricing, the probability of the Fed beginning interest rate cuts in March stands at 70 percent, while the probability of starting in May is at 95 percent.

Yesterday, the US 10-year bond yield, which fell to its lowest level since July 27 at 3.88 percent, closed the day with a 10 basis point decrease at 3.92 percent. It is currently hovering at the 3.95 percent level.

The dollar index, which has extended its downward trend to the fourth consecutive trading day today, tested the 101.8 level yesterday, reaching its lowest level in approximately the last 4 months. It is currently at the 101.9 level.

The ounce price of gold, which closed the day at 2,036 dollars with a 0.6 percent increase yesterday, is trading just below its previous close today.

The barrel price of Brent crude oil is hovering at 77.1 dollars with a 0.3 percent increase, extending its upward trend to the third consecutive trading day.

With these developments, the Nasdaq index rose 0.19 percent and the S&P 500 index rose 0.26 percent yesterday on the New York stock exchange, reaching their highest levels in the last year, while the Dow Jones index closed the day at an all-time high with a 0.43 percent gain. Index futures in the US also started the new day with a positive trend.

While a positive trend stood out in Europe yesterday, excluding Germany, eyes have turned to the preliminary PMI data to be released across the region today.

Following the Fed, the ECB and the BoE also kept interest rates unchanged at their final meetings of the year, while ECB President Christine Lagarde stated that they would remain data-dependent rather than time-dependent for interest rate cuts.

After the BoE kept its policy rate unchanged at 5.25 percent, the highest level in the last 15 years, in line with expectations, the statement from the bank indicated that the bank's projections are for the policy rate to remain at 5.25 percent until the third quarter of 2024 and to be gradually reduced to 4.25 percent by the end of 2026.

Analysts reported that the BoE maintained a "hawkish" stance in its messages yesterday, delaying expectations regarding a possible interest rate cut.

Additionally, the euro/dollar parity, which has extended its upward trend to the fifth consecutive trading day, is currently at the 1.1000 level, just above its previous close.

On the other hand, leaders of European Union (EU) member countries reached an agreement on the 12th sanctions package against Russia, which will also include a ban on diamond trade.

Yesterday, while the DAX 40 index in Germany lost 0.08 percent, the MIB 30 index in Italy gained 0.21 percent, the CAC 40 index in France gained 0.59 percent, and the FTSE 100 index in the UK gained 1.33 percent. Index futures in Europe started the new day with a positive trend.

A positive trend prevailed in Asian markets, with the exception of China.

As the increased risk appetite in global equity markets carried over to Asia, the People's Bank of China (PBoC) did not change its key policy interest rates and provided more liquidity in response to the increasing cash demand in the market.

According to data released today, industrial production in China exceeded expectations with a 6.6 percent annual increase in November, while retail sales remained below estimates with a 10.1 percent annual increase.

In Japan, the preliminary manufacturing PMI remained below forecasts at 47.7, while the services sector PMI was 52.

On the other hand, while the monetary policy decisions to be taken by the Bank of Japan (BoJ) next week are in the focus of investors, analysts reported that expectations that the bank could give the first signals of normalization steps continue to strengthen.

Near the close, the Nikkei 225 index in Japan gained 0.8 percent, the Kospi index in South Korea gained 0.6 percent, the Shanghai composite index in China gained 0.3 percent, and the Hang Seng index in Hong Kong gained 3 percent.

Domestically, the BIST 100 index at Borsa Istanbul, which followed a buying-weighted trend yesterday, closed the day with a 3.77 percent gain at 7,813.40 points, while the Turkey evaluation report expected to be announced by international credit rating agency Moody's this evening has become the focus of investors.

The dollar/TL, which followed a flat trend yesterday and closed the day at 28.9811, just above its previous close, is trading at 29.0320 at the opening of the interbank market today.

Turkey's 5-year credit default swap (CDS), which has been on a downward trend since the end of May with the steps taken by the new economic management, fell below 300 basis points for the first time since March 2021 yesterday, dropping to 290 basis points.

Attending the Turkish Exporters Assembly (TİM) Sectors Council meeting, Central Bank of the Republic of Turkey (TCMB) Governor Dr. Hafize Gaye Erkan stated that the time for the transition to the Turkish lira has come, saying, "We see the most direct reflections of this in deposit developments."

On the other hand, according to data released by the TCMB yesterday, non-residents made the highest inflow into stocks since the week of November 13, 2020, and into Government Domestic Debt Securities (DİBS) since the week of August 25, 2017, last week.

The total reserves of the TCMB also reached an all-time high, increasing by 1 billion 225 million dollars in the week of December 8 compared to the previous week, to 141 billion 374 million dollars.

Analysts stated that today, domestically, the TCMB Market Participants Survey, short-term debt stock, as well as the Turkey evaluation report expected to be announced by international credit rating agency Moody's after the markets close this evening, and abroad, a busy data agenda, primarily preliminary PMI data worldwide and industrial production in the US, will be followed.

Stating that 7,900 and 8,000 points stand out as resistance for the BIST 100 index from a technical perspective, analysts noted that the 7,800 and 7,700 levels are in the position of support.

News Source: 12punto