ISTANBUL
Global markets started the week on a mixed course, as uncertainties over the future monetary policies of central banks affect pricing, putting interest rate decisions of the world’s central banks under spotlight.
Despite the expectation that major central banks may start cutting interest rates in March, it grows smaller day by day, as the macroeconomic data announced since the beginning of the year and the hawkish policies of central banks affect the possibility of a reduction in interest rates.
Estimates that the Fed will cut interest rates for the first time in March declined to 47%, while pricing for a rate cut fell by about 30 basis points compared to the previous week.
Growth data to be released in the US this week may signal what Fed will do next, and markets may grow more volatile upon the release, analysts say.
International credit rating agency Fitch Ratings said that the interest rate cuts of the world’s central banks will be geographically widespread in 2024, but the cuts will not be drastic.
The escalation of multiple geopolitical crises was the second most talked about topic, right after artificial intelligence, at this year’s World Economic Forum (WEF) held in Davos, Switzerland.
Given these developments, the US 10-year bond yields, which approached 4.20% on Friday, went down to 4.14% with purchases from this level, however, it stands at 4.12% on Monday.
The ounce price of gold, which completed the day at $2,028, up 0.3% on Friday, is currently trading at $2,024, 0.2% below its previous close.
Amid the tensions in the Middle East, OPEC member Libya’s resumption of production in the El Sharara oil field put downward pressure on oil prices, as the price of Brent crude oil started the new week at $77.9 per barrel, down 0.5%.
With expectations that demand for chips used for artificial intelligence will increase, new peaks were recorded in New York stock markets led by technology stocks, with the Nasdaq index up 1.70%, the S&P 500 1.23%, and the Dow Jones index 1.05%.
While negative sentiment was prominent in European stock markets, except for the UK, this week, investors focused on the European Central Bank's (ECB) interest rate decision.
The ECB is almost certain to leave interest rates unchanged at this week’s meeting, while expectations that the bank could make its first rate cut in April remain strong, though weaker than the previous week, according to analysts.
However, Fitch Ratings said in a statement that interest rates at the end of 2024 will still be well above pre-pandemic levels, while no further interest rate hikes are expected from the ECB or the Bank of England (BoE), and it was noted that each bank is expected to cut interest rates by 75 basis points until the end of the year.
In light of these developments, the FTSE 100 index in the UK increased 0.04%, while the CAC 40 index in France fell 0.40%, the DAX 40 index in Germany by 0.07%, and the MIB 30 index in Italy by 0.22%.
Given these changes, index future contracts in Europe started the week on a mixed course.
As for the Asian equity markets, a mixed course was also prominent, with the People’s Bank of China leaving the benchmark interest rates unchanged, which reduced the risk appetite in the country’s equity markets.
At the monetary policy board conference of the Bank of Japan, which will start on Monday and end on Tuesday, it is estimated that there will be no change in its monetary policy, while the bank is expected to give signals about the next period.
In view of these changes, near the close, the Nikkei 225 index in Japan saw an uptick of 1.3% and the Kospi index in South Korea 0.1%, whereas the Shanghai Stock Exchange Composite Index in China recorded a downtick of 1.3% and the Hang Seng index in Hong Kong 2%.
As for Türkiye, it saw a mixed course on Friday, with the country’s BIST 100 index dropping 0.24% to 7,996.70 points at last week’s close, as Türkiye's Central Bank (TCMB) is yet to announce its interest rate decision at the monetary policy committee meeting.
Economists participating in the expectations survey conducted by Anadolu estimate that the TCMB will raise its one-week repo auction interest rate (policy rate) by 250 basis points to 45%.
The USD/TRY followed an upward trend on Friday last week, closing the day at 30.2001 with an increase of 0.2%, while it was trading at 30.2160 at Monday's opening.
Analysts stated that the Producer Price Index (PPI) of countries, the central government debt stocks, and the US leading index data will be followed all over the world on Monday.
In the BIST 100 index, it was said that 7,900 and 7,800 levels are in support, 8,100 and 8,200 points are in resistance position.
*Writing by Emir Yildirim
