While a negative trend is observed in the markets due to increasing concerns that the “hawkish” steps of the US Federal Reserve (Fed) have not yet come to an end, inflation data in the US and the interest rate decision of the European Central Bank (ECB) will be in the focus of investors next week.
As part of the fight against inflation, increasing uncertainties regarding the steps to be taken by the Fed in the rest of the year, which increased the policy rate by 25 basis points to 5.25-5.50 percent at its July meeting, reaching the highest level in the last 22 years, continue to affect asset prices.
Analysts said that the inflation data to be announced next week in the USA may shed light on the path the bank will follow in the future.
After the predictions that the Fed would not increase interest rates until the end of 2023 came to the fore for a while, expectations that the bank could continue its tightening monetary policy gained strength as the data announced for the service sector came in better than expectations.
Analysts stated that the recent increases in energy prices may cause inflation to remain alive and that the strong employment market may increase the Bank’s potential interest rate increase need.
Uncertainty has increased
Stating that it is certain that the Fed will leave the policy rate constant in the September meeting, according to the pricing in the money markets, analysts stated that the probability of the bank increasing the interest rate by 25 basis points in the November meeting has increased to 44 percent, indicating that uncertainty has increased.
Analysts stated that, following the recently announced data on the labor market, softening the employment market may be of critical importance within the scope of the Fed’s inflation fight program.
While the verbal guidance of Fed officials regarding future policies is also in the focus of investors, New York Fed President John Williams noted that he expects the unemployment rate to increase and rise above 4 percent next year.
Chicago Fed President Austan Golsbee said, “We are rapidly approaching a time when our debates will no longer be about how much interest rates should rise.”
Fed Board Member Christopher Waller stated that he needed more data to say whether interest rate increases have come to an end or not, and that it does not seem likely that another interest rate increase will plunge the economy into recession.
Also last week, the Fed published its “Beige Book” report, which includes assessments of the current state of economic activity in the country. The report noted that economic growth was “moderate” in July and August and employment growth slowed down across the country.
New York stock markets followed a negative trend
While stock markets in the USA follow a negative trend due to concerns that the Fed may continue to increase interest rates, the Consumer Price Index (CPI) to be announced in the country next week will be in the focus of investors.
Analysts stated that risk appetite has decreased as expectations that the Fed may continue its hawkish steps in the stock markets have strengthened, and that the inflation data to be announced in the country next week may increase volatility.
According to data released in the USA last week, the Institute for Supply Management (ISM) service sector Purchasing Managers Index (PMI) exceeded expectations with 54.5, indicating growth in the service sector for the 8th consecutive month.
The number of people applying for unemployment benefits for the first time in the country decreased to 216 thousand, below market estimates, and also recorded its lowest level since February.
Mortgage (housing loan) applications in the USA fell to the lowest level recorded since December 1996 last week, despite the decline in interest rates.
In addition, the US Federal Deposit Insurance Corporation (FDIC) reported that the profit of the banking sector in the country decreased by 11.3 percent in the second quarter of this year compared to the previous quarter.
On the other hand, after the news flow that the Chinese government banned public employees from using iPhones, Apple’s share price, which is traded on the Nasdaq index, completed the week with a 6 percent decrease. After the news, the company’s market value lost 200 billion dollars.
Despite the tensions between the USA and China, Apple has the largest share of smartphone sales in China with 22 percent.
With these developments, last week, the S&P 500 index in the New York Stock Exchange completed the week with a decrease of 1.24 percent, the Dow Jones index with a decrease of 0.75 percent and the Nasdaq index with a decrease of 1.93 percent.
In the data calendar for the week starting with September 11, inflation will be followed on Wednesday, retail sales, weekly unemployment applications and PPI on Thursday, and New York Fed manufacturing index, industrial production and capacity utilization rate, Michigan Consumer Confidence Index data will be followed on Friday.
Support from foreign organizations to Turkey’s economic policies
The BIST 100 index, which moved in an upward trend last week in the country and differentiated itself positively from the global share markets, completed the week with an increase of 3.34 percent at 8,325.30 points, achieving the highest weekly closing of all time, and breaking the record for the highest level it had ever seen, to 8,398.44 points.
Risk appetite increased in Borsa Istanbul when World Bank Turkey Country Director Humberto Lopez announced that, in addition to the ongoing 17 billion dollar program, they plan to prepare and present new operations worth 18 billion dollars to the World Bank Board of Directors within three years.
Credit rating agency Moody’s evaluated Turkey’s recent return to traditional economic policies positively in terms of a stronger credit rating and stated in the information note sent to investors: “We now think that the risk/reward balance is in favor of direct TL purchases” is also effective in the relevant rise. It was one of the developments that happened.
Last night, international credit rating agency Fitch Ratings confirmed Turkey’s credit rating as “B” and increased its rating outlook from “negative” to “stable” after 2 years.
In the statement made by the organization, it was emphasized that the revision of the outlook to “stable” reflects a return to a more traditional and consistent policy mix that reduces short-term macrofinancial stability risks and alleviates balance of payments pressures.
In the statement, in which it was estimated that the CBRT would increase the policy rate to 35 percent by the end of 2023 and keep it at this level in 2024, it was claimed that there was a high level of uncertainty about the future pace and duration of monetary policy tightening.
Effects of MTP
On the other hand, the Presidential Decision regarding the approval of the Medium Term Program (MTP), which includes the 3-year targets and policies of the Turkish economy, was published in the duplicate issue of the Official Gazette.
Basic economic aggregates and targets were determined with the MTP prepared by the Ministry of Treasury and Finance and the Strategy and Budget Directorate and covering the period 2024-2026.
Accordingly, the realization forecast for growth this year was 4.4 percent. It was predicted that the economy would grow 4 percent in 2024, 4.5 percent in 2025, and 5 percent in 2026.
In addition, the Capital Markets Board (CMB) decided that Hat-San Gemi İnşaat Maintenance and Repair Deniz Nakliyat Sanayi ve Ticaret AŞ was sold at 22.60 liras, Reeder Teknoloji Sanayi ve Ticaret AŞ at 9.30 liras and Adra Gayrimenkul Yatırım Ortaklığı AŞ at 22 liras. It announced that it had approved its initial public offering at .66 lira.
The Banking Regulation and Supervision Agency (BRSA) decided to lift the credit restriction of companies that correct irregularities related to missing documents or independent audit statements.
According to the decision, companies that cannot receive a loan due to their foreign currency position will be able to use a loan if they undertake to reduce their foreign currency position below the limit.
Dollar/TL completed the week at 26.8498, 0.4 percent above the previous close.
According to the data announced last week in the country, CPI exceeded expectations with an increase of 58.94 percent on an annual basis in August, while the total reserves of the Central Bank of the Republic of Turkey (CBRT) reached 120 billion 624 million dollars in the week of September 1, and the upward trend moved to the 12th week in a row. .
Analysts stated that in the BIST 100 index, technically, 8,300 and 8,200 levels may stand out as support, while 8,400 and 8,500 points may stand out as resistance.
Next week in the country, industrial production, labor force statistics and balance of payments on Monday, construction cost index, retail sales and turnover indices on Tuesday, private sector loan debt from abroad on Thursday, short-term external debt statistics, agriculture on Friday. PPI and CBRT’s Market Participants Survey data will be followed.
He announced that he had extended it to the end.
Bent oil had the highest close of a year in barrel prices yesterday
Following this development, the barrel price of Brent oil gained momentum, completing the week with an increase of 1.6 percent at $90.2, achieving its highest weekly closing since November 2022.
Carrying its upward trend for the 8th week in a row, the dollar index completed the week with a 0.8 percent increase at 105.1, making the strongest weekly closing in the last 7 months.
While the US 10-year bond interest rate completed the week at 4.26, with an increase of approximately 7 basis points, the ounce price of gold decreased by 1.1 percent, completing the week at $1,919.2, as rising bond yields and the dollar continued to gain value.