Global markets trend positive after US inflation continues to slow

Global markets are trending positively following the continued slowdown of inflation in the US, while investors are focused on the US Federal Reserve's (Fed) final interest rate decision of the year to be announced today and the subsequent remarks by Fed Chair Jerome Powell.

The Consumer Price Index (CPI) in the US, which was announced yesterday, rose by 0.1 percent in November, contrary to market expectations of no change on a monthly basis, and increased by 3.1 percent annually, in line with forecasts. The annual inflation rate, which continues to slow, recorded its lowest level in 5 months.

Core CPI, which excludes volatile energy and food prices, rose by 0.3 percent monthly and 4 percent annually in November, in line with expectations. During this period, core inflation remained at its lowest level in 2 years on an annual basis.

Prior to the interest rate decision, pricing in money markets indicates a 45 percent probability that the Fed will begin interest rate cuts in March, and a 75 percent probability that it will begin in May.

Analysts stated that it is considered certain that the Fed will keep the policy rate unchanged in the 5.25-5.50 percent range at its third consecutive and final meeting of the year, adding that clues regarding the bank's future monetary policy will be sought in Fed Chair Jerome Powell's forward guidance.

US Treasury Secretary Janet Yellen also made statements yesterday, saying that inflation in the country has fallen in a "meaningful" way and that she sees no reason why it should not descend to the Fed's target.

International credit rating agency Fitch Ratings reported yesterday that the outlook for most global financial institutions is neutral due to their adaptation to high interest rates, but that the banking sector outlook in the US and China has deteriorated.

On the other hand, following the aforementioned inflation data, the VIX Index, which shows the volatility in the S&P 500 Index in the US and is also known as the "fear index," fell to its lowest level in 4 years.

Furthermore, according to data released yesterday, the US federal government's budget deficit rose to 314 billion dollars in November, an increase of 26 percent compared to the same month last year, while analysts noted that the Producer Price Index (PPI) data to be announced in the US today will also be monitored.

Following these developments, the US 10-year bond yield is at the 4.2 percent level, and the dollar index is moving sideways at 103.9.

The ounce price of gold, which has extended its downward trend for the fourth consecutive trading day, is finding buyers at 1,978 dollars today with a 0.1 percent decrease.

The barrel price of Brent oil, which completed the day at 73.5 dollars yesterday with a 3.6 percent drop due to increasing signs of strong oil supply, fell to its lowest level in approximately the last 6 months. It is currently trading at 73.3 dollars, 0.3 percent below its previous close.

In Argentina, which has been experiencing an economic crisis for a long time, the government announced that it will devalue the Argentine peso by more than 50 percent against the dollar and restrict public spending as part of its fight against the financial crisis.

On the other hand, shares of software company Oracle saw losses exceeding 12 percent yesterday after the company's revenue remained below expectations, while shares of Exxon Mobil and Chevron also fell by more than 1 percent due to the drop in oil prices.

In the New York stock market yesterday, the Nasdaq index rose by 0.70 percent, the S&P 500 index by 0.46 percent, and the Dow Jones index by 0.48 percent. Index futures in the US also started the new day with a positive trend.

While a negative trend stood out in Europe yesterday, the intense data agenda across the region is the focus of investors today.

Data released in Europe yesterday gave positive signals regarding economic activity.

In Germany, the ZEW Economic Sentiment Index rose to 12.8 in December, exceeding estimates due to increasing expectations that the European Central Bank (ECB) will lower interest rates in the medium term despite the budget crisis, while it rose to 20.3 in the Eurozone.

Yesterday, the German Engineering Federation (VDMA) reported that a 1 percent decline is expected in Germany's mechanical engineering production for this year and a 4 percent decline for next year.

On the other hand, the European Union (EU) Commission has prepared a plan to transfer the income generated from frozen Russian assets to a different account to help with the reconstruction of Ukraine.

Additionally, Fitch Ratings reported yesterday that a moderate price increase is expected in most European housing markets in 2024.

Yesterday, the DAX 40 index in Germany lost 0.02 percent, the MIB 30 index in Italy 0.28 percent, the CAC 40 index in France 0.11 percent, and the FTSE 100 index in the UK 0.03 percent. Index futures in Europe started the new day with a positive trend.

In Asian markets, a negative trend was observed on the new day, excluding Japan, with the real estate sector leading the decline in Chinese and Hong Kong stock markets.

While uncertainty remains regarding which areas of the economy the Chinese government will support, analysts stated that the government may prioritize industrial policy.

Near the close, the Nikkei 225 index in Japan rose by 0.4 percent, while the Kospi index in South Korea fell by 0.8 percent, the Shanghai composite index in China by 0.6 percent, and the Hang Seng index in Hong Kong by 0.8 percent.

Domestically, the BIST 100 index in Borsa Istanbul, which followed a volatile course yesterday, completed the day with a 0.26 percent gain at 7,748.85 points.

The dollar/TL, after closing the day at 28.9958 by following a sideways trend yesterday, is trading at 29.0490 at the opening of the interbank market today.

Analysts stated that retail sales domestically, and industrial production and Gross Domestic Product (GDP) in the UK, industrial production in the Eurozone, the Fed's interest rate decision and Powell's statements in the US, as well as PPI data, will be monitored today, noting that from a technical perspective, 7,760 and 7,860 points are resistance levels for the BIST 100 index, while 7,660 and 7,590 levels are support positions.

News Source: 12punto