Global markets turn their eyes to the US employment report

The October inflation data from the Turkish Statistical Institute (TÜİK), which will directly impact civil servant and retiree salary increases at the end of the year and indirectly affect the salaries of private sector employees, has been announced.

The strengthening impact of the tightening measures implemented by central banks worldwide for some time on inflation is leading policymakers to act more cautiously.

While the labor market remaining strong despite the slowdown in inflation influences investors' decision-making processes, the data in the employment report to be released in the US today is expected to reduce uncertainties regarding the Fed's future policies.

Analysts stated that non-farm payrolls are estimated to have increased by around 180 thousand in September, noting that a possible slowdown in the labor market would signal that economic activity is losing momentum in the US, as intended by the Fed. Non-farm payrolls had increased by 336 thousand in October.

Stating that the data released in the country yesterday was also interpreted as a sign that inflationary pressures continue to ease, analysts noted that this supports predictions that the Fed's interest rate hike cycle is coming to an end.

The number of people filing for unemployment benefits for the first time in the US came in above market expectations last week, reaching 217 thousand, the highest level in 7 weeks.

Unit labor cost, one of the inflation indicators followed by the Fed, which was expected to increase by 0.7 percent, decreased by 0.8 percent in the third quarter compared to the previous quarter.

With expectations of a soft landing for the US economy and the prediction that the Fed's interest rate hikes are coming to an end, a buying-weighted trend has come to the fore in bond markets, while the US 10-year bond yield fell by approximately 8 basis points yesterday to 4.67 percent.

The barrel price of Brent crude oil, after ending its three-day losing streak yesterday with a 2 percent increase to 86.7 dollars, stabilized just above this level on the new day.

The ounce price of gold is finding buyers at 1,986 dollars with a flat trend.

In the ongoing earnings season in the US, Apple was in focus yesterday; the tech giant's revenue for the July-September period decreased by approximately 1 percent year-on-year to 89.5 billion dollars. Apple's net profit increased by 10.8 percent to 22.96 billion dollars in the July-September period.

On the New York Stock Exchange, the Dow Jones index rose 1.7 percent, the S&P 500 index 1.89 percent, and the Nasdaq index 1.78 percent. Index futures in the US started the new day with a mixed trend.

While a buying-weighted trend stood out in European stock markets yesterday, the Bank of England (BoE) kept its policy rate steady at 5.25 percent yesterday.

In his statement after the meeting, BoE Governor Andrew Bailey stated that they expect inflation in the country to fall below 5 percent in October, adding, "However, inflation is still too high. Therefore, we will keep interest rates at a high level for long enough until we bring inflation down to our target level."

Bundesbank President Joachim Nagel stated that he expects growth in the German economy next year following the current weakness.

Financial results of companies announced in the region also increased stock and sector-based volatility in equity markets, while the German airline company Lufthansa Group increased its profit by 31 percent year-on-year in the 3rd quarter to 1.47 billion euros. The company's shares gained more than 7 percent yesterday.

The DAX 40 index in Germany rose 1.48 percent, the CAC 40 index in France 1.85 percent, the FTSE 100 index in the UK 1.42 percent, and the MIB 30 index in Italy 1.76 percent. Index futures in Europe also started the new day with gains.

As the positive trend in the US carried over to Asian equity markets on the new day, the strengthening expectation that interest rate hikes in the West are nearing an end is positively affecting technology companies in Asia in particular.

Near the close, the Nikkei 225 index in Japan rose 1.1 percent, the Kospi index in South Korea 1 percent, the Hang Seng index in Hong Kong 2.4 percent, and the Shanghai composite index in China 0.8 percent.

Domestically, the BIST 100 index on Borsa Istanbul, which followed a buying-weighted trend yesterday, completed the day with a 1.79 percent increase at 7,663.62 points, while all eyes are on the Consumer Price Index (CPI) data to be released domestically today.

Economists participating in the AA Finance expectation survey expect the CPI to increase by 4.08 percent in October.

Central Bank of the Republic of Turkey (TCMB) Governor Hafize Gaye Erkan said in yesterday's Inflation Report presentation, "We will continue to strengthen monetary tightening until a significant improvement in inflation is achieved."

Stating that the time to start disinflation will be after May, Erkan stated that with the steps taken, total sterilization will soon exceed 1 trillion liras.

Erkan also stated that they have updated the midpoints of their inflation forecasts to 65 percent for 2023, 36 percent for 2024, and 14 percent for 2025.

The Dollar/TL, after completing the day at 28.3533 with a 0.1 percent increase yesterday, is trading at 28.3820 at the opening of the interbank market today.

Analysts stated that they will follow the intense data agenda, primarily the CPI and Producer Price Index (PPI) domestically and the employment report in the US, as well as the news flow regarding the Israel-Palestine conflict, noting that from a technical perspective, the 7,750 and 7,850 levels are resistance and the 7,600 point level is support for the BIST 100 index.

News Source: 12punto