As the new week begins, global markets embark on a mixed course, influenced by uncertainties surrounding the future monetary policies of central banks. The spotlight is on interest rate decisions by central banks worldwide, and the impact on market pricing remains a subject of speculation.
Amid expectations that major central banks might initiate interest rate cuts in March, these prospects are diminishing due to macroeconomic data released since the beginning of the year. The hawkish stance adopted by central banks further complicates the likelihood of a reduction in interest rates.
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Federal Reserve’s Role and Market Volatility
Estimates concerning the Federal Reserve‘s potential interest rate cut in March have declined to 47%, with a 30 basis points decrease in rate cut pricing compared to the previous week. The upcoming release of growth data in the United States is anticipated to provide insights into the Fed’s next moves, potentially leading to increased market volatility.
Fitch Ratings, an international credit rating agency, anticipates that interest rate cuts by central banks worldwide will be geographically widespread in 2024, albeit not drastic. The broader context of geopolitical crises, extensively discussed at the World Economic Forum in Davos, Switzerland, adds another layer of complexity to the market landscape.
Market Indicators and Commodity Trends
Against this backdrop, the U.S. 10-year bond yields experienced fluctuations, initially approaching 4.20% and subsequently decreasing to 4.14% on Monday. Meanwhile, the price of gold, which closed at $2,028 on Friday, is currently trading at $2,024, reflecting a 0.2% decrease.
In the Middle East, OPEC member Libya’s resumption of oil production in the El Sharara field has influenced oil prices. The Brent crude oil price started the week at $77.9 per barrel, marking a 0.5% decline.
Technology Stocks Lead U.S. Markets
Anticipating an increased demand for chips used in artificial intelligence, U.S. stock markets, particularly the Nasdaq index, surged. The Nasdaq recorded a 1.70% increase, the S&P 500 rose by 1.23%, and the Dow Jones index climbed by 1.05%.
Mixed Trends in European Indices
Reflecting these dynamics, the FTSE 100 index in the UK increased by 0.04%, while the CAC 40 index in France fell by 0.40%, the DAX 40 index in Germany by 0.07%, and the MIB 30 index in Italy by 0.22%. Index futures contracts in Europe started the week with a mixed course.
Global Markets React to Central Bank Policies
Asian equity markets also experienced a mixed course, influenced by the People’s Bank of China’s decision to maintain unchanged benchmark interest rates, reducing risk appetite. The Bank of Japan’s ongoing monetary policy board conference is closely watched for signals about the next period.
The Nikkei 225 index in Japan witnessed an uptick of 1.3%, while the Kospi index in South Korea rose by 0.1%. In contrast, the Shanghai Stock Exchange Composite Index in China recorded a downtick of 1.3%, and the Hang Seng index in Hong Kong saw a 2% decline.
Türkiye’s Market Dynamics
Türkiye experienced a mixed course in its BIST 100 index, which dropped by 0.24% to 7,996.70 points at the previous week’s close. The Türkiye Central Bank’s interest rate decision, yet to be announced, is a key factor in market movements.
Economists in Türkiye anticipate a potential 250 basis points increase in the one-week repo auction interest rate (policy rate) to 45%. The USD/TRY trended upward on Friday, closing at 30.2001, and continued trading at 30.2160 at Monday’s opening.
Global Economic Indicators and Future Focus
Analysts emphasize that global attention will be on countries’ Producer Price Index (PPI), central government debt stocks, and the U.S. leading index data on Monday. In the BIST 100 index, support levels are identified at 7,900 and 7,800, while resistance positions are marked at 8,100 and 8,200 points.