Global markets eye Powell: What will the Fed Chair say?

Global markets completed the first quarter of the year with a positive trend. As markets await the statements to be made today by US Federal Reserve (Fed) Chair Jerome Powell, personal consumption expenditures data, which the Fed considers as an inflation indicator, have also become the focus of investors. While a flat trend was observed in equity markets following growth data that came in above expectations in the US yesterday, markets in the US, Europe, and Hong Kong will be closed for trading today due to the Easter holiday.

According to yesterday's data, the US economy grew by 3.4 percent in the 4th quarter of 2023, exceeding expectations. While there was an upward revision in the growth data for this period, market expectations were for the economy to grow by 3.2 percent in the final quarter.

Analysts stated that uncertainties regarding when the Fed will begin interest rate cuts continue, and expressed that in addition to Fed Chair Powell's forward guidance today, clues about the steps the Bank will take in the coming period will be sought from personal consumption expenditures data.

On the other hand, according to data released yesterday, the consumer confidence index measured by the University of Michigan was also revised upward to 79.4 in March.

The number of people filing for unemployment benefits for the first time in the US fell to 210 thousand last week, coming in below expectations.

Following these developments, the probability of the Fed making its first interest rate cut in June reached 64 percent in money market pricing.

The US 10-year bond yield rose to 4.2050 percent while moving in a narrow band yesterday, and the ounce price of gold completed the day with a 1.7 percent increase at 2 thousand 233 dollars, achieving its highest daily close of all time. Thus, the ounce price of gold recorded an 8.2 percent increase in the first quarter of this year.

The dollar index also extended its upward trend to the 4th consecutive trading day yesterday, completing the day with a 0.1 percent increase at the 104.6 level.

In the first quarter of the year, where uncertainties regarding supply and demand balance as well as geopolitical tensions came to the fore, the barrel price of Brent oil gained 12.9 percent in value.

Additionally, in the US equity markets, which completed the first quarter of the year yesterday, the S&P 500 index recorded its best first-quarter gain since 2019 with a 10.2 percent increase in the first 3 months. During this period, while the Dow Jones index achieved its strongest first-quarter performance since 2021 with a 5.6 percent increase, the Nasdaq index also rose by 9.1 percent.

Yesterday on the New York Stock Exchange, the Nasdaq index fell by 0.12 percent, while the S&P 500 index and the Dow Jones index recorded increases of 0.11 percent and 0.12 percent, respectively.

While a flat trend dominated European stock markets yesterday, there will be no trading in equity markets across the region today due to the holiday.

European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau said that the ECB will likely begin 'moderate' interest rate cuts this spring and that this will happen independently of the Fed's timeline. Villeroy noted that it is not of 'existential importance' whether this cut takes place in April or June.

Yesterday in the UK, the FTSE 100 index rose by 0.26 percent, the MIB 30 index in Italy by 0.03 percent, the DAX 40 index in Germany by 0.08 percent, and the CAC 40 index in France by 0.01 percent.

Looking at the first-quarter performances of this year, it is noteworthy that the DAX 40 index in Germany showed a 10.4 percent increase, while the CAC 40 index in France gained 8.8 percent in value. The FTSE 100 index in the UK also completed the first quarter with a 2.8 percent rise.

While a positive trend dominated Asian equity markets, there was no trading in Hong Kong today due to the holiday.

Today, the Japanese parliament enacted a 112.5 trillion yen (744 billion dollar) budget for the 2024 fiscal year, and Finance Minister Suzuki Shunichi stated in his announcement that the budget aims to "overcome urgent challenges that cannot be postponed."

On the other hand, according to data released in Japan today, the Tokyo Consumer Price Index (CPI) recorded an annual increase of 2.6 percent, and the core CPI recorded an increase of 2.4 percent.

According to preliminary data in the country, industrial production fell by 0.1 percent monthly in February, remaining below expectations, while the unemployment rate rose to 2.6 percent.

Near the close, the Nikkei 225 index in Japan gained 0.4 percent, the Kospi index in South Korea 0.1 percent, and the Shanghai composite index in China 0.6 percent in value.

In the domestic market, the BIST 100 index on Borsa Istanbul, which followed a buying trend yesterday, completed the day with a 3.10 percent gain at 9,079.97 points.

The Dollar/TL, after completing the day 0.2 percent above its previous close at 32.3366 yesterday by following a buying trend, is trading at the 32.3700 level at the opening of the interbank market today.

Analysts stated that foreign trade statistics domestically and personal consumption expenditures price index data in the US, as well as Fed Chair Powell's statements, will be followed today, and noted that from a technical perspective, the 9,200 and 9,300 levels are resistance, and 9,000 and 8,900 points are support positions for the BIST 100 index.

The data to be followed in the markets today are as follows:

10.00 Turkey, February foreign trade statistics

15.30 US, February personal consumption expenditures price index

15.30 US, February personal expenditures

News Source: AA