How did global markets start the day? Fed uncertainty

In global markets, uncertainty regarding when the US Federal Reserve (Fed) will begin interest rate cuts is reducing risk appetite, while it is expected that data to be released in the US for the remainder of the week and forward guidance from Fed officials will increase volatility in asset prices.

The Fed has released its audited annual financial statement for 2023. The bank reported a loss of 114.3 billion dollars, marking its largest operating loss to date.

While it is considered certain that the hawkish policy steps taken by major central banks as part of the global fight against inflation will not continue, uncertainty remains regarding when interest rate cuts will begin.

Analysts stated that this uncertainty could decrease with signals from macroeconomic data, noting that growth data to be released in the US tomorrow and the personal consumption expenditures, which the Fed considers as an inflation indicator, to be released on Friday could provide clues about the steps the bank will take in the coming period.

Furthermore, while forward guidance from Fed officials is also being monitored, the probability of the Fed making its first interest rate cut in June has fallen to 67 percent in money market pricing following cautious signals from some bank officials yesterday.

According to data released in the country yesterday, durable goods orders recorded a monthly increase of 1.4 percent in February, exceeding market expectations, while the Conference Board (CB) Consumer Confidence Index fell by 0.1 points monthly to 104.7 in March.

Interest expenses on reserve balances of depository institutions rose to 176.8 billion dollars last year, while interest expenses related to repo operations were 104.3 billion dollars.

While it is observed that movement in bond markets continues within a narrow band, the US 10-year bond yield is following a flat course at the 4.24 percent level. The ounce price of gold is also finding buyers just above its previous close at 2,179 dollars.

The dollar index, after following a volatile course in the 103.4-104.4 band yesterday, is currently at the 104.3 level.

A significant increase in US oil stocks yesterday put downward pressure on oil prices, and the barrel price of Brent oil completed the day with a 1 percent decrease at 85.2 dollars. It is currently trading at 84.9 dollars, down 0.4 percent from its previous close.

Shares of Apple, one of the US technology giants, lost nearly 1 percent of their value following news that iPhone shipments in China fell by approximately 33 percent year-on-year in February.

On the other hand, the international credit rating agency S&P Global, in its report on the US economy, stated that economic growth in the US is expected to be 2.5 percent in 2024 due to the labor market remaining robust.

Yesterday, on the New York stock market, the Nasdaq index fell by 0.42 percent, the S&P 500 index by 0.28 percent, and the Dow Jones index by 0.08 percent. Index futures in the US also started the new day with a negative trend.

While a positive trend prevailed in European stock markets yesterday, investors are monitoring consumer confidence index data as well as forward guidance from central bank officials in the region today.

Analysts reported that it is uncertain when the European Central Bank (ECB) and the Bank of England (BoE) will begin interest rate cuts, but that the probabilities of both banks making their first interest rate cut at their June meetings are coming to the fore in money market pricing.

WHAT IS THE OUTLOOK IN MONEY MARKETS?

In money markets, the probability of the ECB making an interest rate cut in June is priced at 76 percent, and at 74 percent for the BoE.

Analysts stated that growth data to be released in the UK tomorrow could cause changes in money market pricing, and that forward guidance from BoE and ECB officials could also increase volatility in equity markets.

Yesterday, the FTSE 100 index in the UK rose by 0.17 percent, the MIB 30 index in Italy by 0.14 percent, the DAX 40 index in Germany by 0.67 percent, and the CAC 40 index in France by 0.41 percent. Index futures in Europe started the new day with a mixed trend.

While a mixed trend stands out in Asian equity markets, the rise in the Nikkei 225 index drew attention after the Japanese yen fell to its lowest level in 34 years against the dollar.

After Bank of Japan (BoJ) Board member Naoki Tamura said that he would maintain supportive financial conditions for some time and would proceed "slowly and steadily" with policy changes, the dollar/yen parity rose to 151.97, its highest level in approximately the last 34 years.

Following these developments, after BoJ Governor Kazuo Ueda said, "Future monetary policy decisions will depend on the economy and price developments at that time," and Japanese Finance Minister Shunichi Suzuki stated, "We will take all possible measures for currency stability, taking market movements into account," the dollar/yen parity retreated, albeit limitedly, to the 151.6 level.

Analysts stated that the weakening yen increased risk appetite in the country's equity markets, noting that future statements from BoJ officials are in the focus of investors.

On the other hand, data released in China today showed that total industrial profits in the country increased by 10.2 percent year-on-year in January and February, while industrial profits fell by 2.3 percent in 2023.

Additionally, China filed a complaint with the World Trade Organization (WTO) on the grounds that subsidies for domestic electric vehicle manufacturers for the fight against climate change in the Inflation Reduction Act, which the US passed in 2022, are contrary to competition rules.

Near the close, the Nikkei 225 index in Japan rose by 1.1 percent, while the Shanghai composite index in China lost 0.5 percent and the Hang Seng index in Hong Kong lost 0.7 percent. The Kospi index in South Korea is following a flat course.

In the domestic market, the BIST 100 index on Borsa Istanbul, which followed a selling trend yesterday, completed the day with a 2.46 percent loss at 8,807.38 points.

The dollar/TL, after completing the day 0.1 percent above its previous close at 32.1897 by following a buying trend yesterday, is trading at the 32.2200 level at the opening of the interbank market today.

On the other hand, S&P Global raised its total growth forecast for 2024 for emerging countries from 4.1 percent to 4.2 percent, and for Turkey from 2.4 percent to 3 percent.

Analysts stated that the data agenda is calm domestically today, while consumer confidence index data in the Eurozone will be monitored abroad, noting that technically, the 8,800 and 8,700 levels are support, and the 8,900 and 9,000 points are resistance for the BIST 100 index.

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

13.00 Eurozone, March consumer confidence index

News Source: AA