Uncertainties dominate global markets

ISTANBUL

The mixed course in global markets continues this week in the aftermath of a hawkish stance by central banks and strong macroeconomic data supporting monetary tightening.

The European Central Bank's (ECB) hawkish stance surprisingly last week and the strong employment data announced in the US continue to have an impact on the markets.

Markets expect that the US Federal Reserve (Fed) will raise interest rates by 150 basis points in six meetings this year, and the ECB will increase the rate by 40 basis points during 2022.

While investors focused on the verbal guidance of monetary policy officials, ECB Governor Christine Lagarde's statements on Monday can increase the volatility in asset prices.

While Fed officials' negative comments last week related to an interest rate hike of 50 basis points increased uncertainties in markets, inflation figures in the US this week are expected to decrease uncertainties.

With these developments, it is observed that the risk appetite in global stock markets is low, while the ongoing increase trend in oil prices indicates that the cost pressures on the economy may continue.

The price of Brent oil per barrel is at $92.9 currently, the highest level since October 2014, started the eighth week of gains after seven weeks of an upward trend.

The US 10-year bond yield is currently stabilizing at 1.91% after rising to 1.94% on Friday due to the non-farm employment data, which surpassed expectations.

On Friday, the S&P 500 index gained 0.52% and the Nasdaq index gained 1.58% in the New York stock market, while the Dow Jones index fell 0.06% In the US, index futures contracts are mixed on the first trading day of the new week.

The tension between Russia and Ukraine continues to affect asset prices.

While analysts focused on the decisions to come out of the meeting between US President Joe Biden and German Chancellor Olaf Scholz, the US National Security Advisor Jake Sullivan asserted that Russia could invade Ukraine at any moment.

With the selling pressure in the bond markets after the hawkish monetary policy in Europe, Germany's 10-year bond yield rose to 0.21%.

The euro/dollar parity, on the other hand, started the new week with a downward trend after five consecutive days of an upward trend and is currently at 1.1440.

On Friday, the DAX index in Germany fell by 1.75%, the FTSE 100 index in the UK by 0.17%, the CAC 40 index in France by 0.77% and the FTSE MIB 30 index in Italy by 1.79%. European indices are positive in futures on Monday.

While the Chinese markets, which were closed last week due to the New Year holiday in Asia, were reopened, expectations that China will be more sensitive for the regulation steps support the risk appetite.

According to the macroeconomic data released in the region, the service sector Purchasing Managers Index (PMI) in China decreased to 51.4 and the composite PMI to 50.1.

Leading indicators index in Japan exceeded expectations and reached 104.3.

Asian indices closed last week with mixed figures, on Monday, and all major indices except Shanghai are in the negative territory.

On Friday, Turkiye's BIST 100 index lost 0.72% and closed the day at 1,943.81 points.

The USD/TRY exchange rate closed the last week at 13.5625 and it is around 13.56 currently.

*Writing and contributions by Gokhan Ergocun