Global markets start the new week with a negative trend

Global markets started the new week with a negative trend due to the Israel-Palestine conflict and developments between the US and China, while investors are now focused on the guidance from Federal Reserve (Fed) members, particularly the remarks expected from Fed Chair Jerome Powell on Thursday.

Rising geopolitical risks worldwide continue to affect asset prices, and there are concerns that these risks could also negatively impact the fight against inflation.

On Friday, the price of a barrel of Brent crude oil rose by more than 5 percent to reach 90 dollars, driven by growing fears that the Israel-Palestine conflict could affect oil supply.

Analysts noted that market forecasts for the price of a barrel of oil have risen as high as 150 dollars, stating that developments in oil prices are being closely monitored by investors, especially by central banks currently engaged in the fight against inflation.

Data from the University of Michigan's consumer sentiment index in the US showed that inflation expectations are rising, with US consumers' short-term inflation expectations climbing from 3.2 percent to 3.8 percent in October, marking the highest level since May.

As Fed officials continue their verbal guidance, Philadelphia Fed President Patrick Harker stated on Friday that he believes the Bank is likely finished with interest rate hikes due to the ongoing decline in price pressures. He used the expression, "I believe we are at a point where we can hold interest rates where they are."

Analysts reminded that Fed officials will continue their intense verbal guidance this week, stating that Fed Chair Powell's remarks on Thursday could be influential on the direction of the markets.

Pricing in money markets suggests a 93 percent probability that the Fed will keep the policy rate unchanged next month, while it is also projected that there is a 67 percent probability the Bank will not change the policy rate in December.

The US 10-year Treasury yield is at 4.65 percent on the first day of the new week, following a decline of approximately 8 basis points on Friday.

The price of an ounce of gold, which rose 3.4 percent on Friday due to both the Israel-Palestine war and expectations that the Fed's "hawkish" policies are coming to an end, also recorded its best weekly performance since March with a 5.5 percent increase on a weekly basis.

Meanwhile, as the earnings season accelerated in the US last week, results released on Friday showed that JPMorgan Chase's net profit in the third quarter of this year increased by 35 percent, Citigroup's by 2 percent, and Wells Fargo's by 61 percent compared to the same period last year.

Analysts stated that Charles Schwab's financial results are also expected to be released today.

With these developments, the Dow Jones index rose 0.12 percent on the New York Stock Exchange on Friday, while the S&P 500 index lost 0.50 percent and the Nasdaq index lost 1.23 percent. US index futures, however, started the new week with a buying-weighted trend.

While a selling-weighted trend stood out in European stock markets on Friday, developments in the Middle East are being closely monitored.

A busy macroeconomic data calendar across the region draws attention this week. Signals from the data to be released are expected to be influential on asset prices.

While pricing in money markets suggests it is almost certain that the European Central Bank (ECB) will keep its policy rate unchanged at next month's meeting, Bundesbank President Joachim Nagel stated in his remarks on Friday that the ECB's interest rate hikes have been effective in the fight against inflation and that inflation in Germany is on a downward trend.

Analysts noted that the tone used by ECB officials is becoming increasingly "dovish," stating that this situation could support risk appetite in the markets.

On Friday, the DAX 40 index in Germany fell by 1.55%, the CAC 40 index in France by 1.42%, the MIB 30 index in Italy by 0.90%, and the FTSE 100 index in the UK by 0.59%. Index futures in Europe started the week with a flat trend.

As the selling trend in the New York stock market carried over to Asian equity markets on the first trading day of the new week, the US expansion of restrictions on semiconductor chips to China caused risk perception in the region to strengthen.

The People's Bank of China (PBoC) kept its medium-term lending facility rate steady at 2.50% in its decision today, while providing the strongest liquidity to the markets since December 2020 with 289 billion yuan.

Analysts pointed out that while the PBoC's steps were welcomed by the markets, decisions coming from the US were more influential, noting that rising oil prices also negatively affected risk appetite across the region.

According to data released in Japan, industrial production fell by 0.7% monthly and 4.4% annually.

Near the close, the Nikkei 225 index in Japan fell by 2.2%, the Shanghai composite index in China by 0.5%, the Hang Seng index in Hong Kong by 0.9%, and the Kospi index in South Korea by 1%.

Domestically, the BIST 100 index on Borsa Istanbul, which followed a volatile course on Friday, closed the day at 8,113.30 points, down 1.77 percent.

Following a 0.2 percent increase on Friday to close at 27.7978, the US Dollar/Turkish Lira exchange rate is trading at 27.8500 at the opening of the interbank market today.

Analysts noted that today's agenda includes domestic new home sales and budget balance data, as well as the New York Fed manufacturing index and news flow regarding the Israel-Palestine conflict, adding that from a technical perspective, the 8,080 and 7,900 levels are support for the BIST 100 index, while 8,250 and 8,400 points serve as resistance.

News Source: 12punto