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Global markets are negative

While recession pricing in the USA remained strong, the price of Brent oil per barrel fell to the lowest level since January 4, with the aforementioned concerns, at $79.6.

Global markets are following a negative course with increasing uncertainties amid the strengthening recession and inflation dilemma in the USA. Concerns that the US Federal Reserve (Fed) may continue to raise interest rates longer than expected continue to be influential in pricing in the US markets. 

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While the labor market remains strong in the country, housing, services and industrial markets are showing signs of recession. The fact that some bank executives, who made statements the previous day, stated that they expected a recession of various depths in the USA and that layoffs were imminent, caused an increase in the risk perception in the markets. After the European Union’s decision to block the personalized advertising application of the social media company Meta, the company’s share price lost nearly 5 percent. 

While the recession pricing in the country remains strong, the Fed’s 50 basis points increase in the pricing in the money markets is considered certain. While the barrel price of Brent oil decreased by 4 percent to $79.6, the lowest level since January 4, due to the aforementioned concerns, macroeconomic data in Europe continues to give mixed signals. 

Although the sales-heavy course in the New York stock market also affects the Asian stock markets, China’s continued softening in its “zero Kovid-19” policy limits the selling pressure. While Kovid-19 measures continue to be relaxed in the country, the green light was given for some cases to be quarantined at home. 

Attention in the economy

 

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On the other hand, the growing expectations that the government would turn its attention back to the economy were also effective in breaking the risk perception in the markets. The Reserve Bank of India increased the policy rate by 35 basis points to 6.25% yesterday in line with the expectations. According to the macroeconomic data released yesterday in the region, exports in China decreased by 8.7 percent and imports by 10.6 percent annually in November, significantly below the expectations. 

Waiting for Lagarde’s messages

According to the macroeconomic data announced in Germany, while factory orders increased more than expected, the messages of European Central Bank (ECB) President Christine Lagarde in the statements she will make today are of great importance. Analysts stated that in Lagarde’s speech, signals regarding a return from ultra-hawkish policies will be sought, and that the expectation that a softening in the ECB’s monetary policy stance may occur with the latest inflation data has strengthened.

US revises oil price forecast downwards

The US Energy Information Administration (EIA) revised its oil price forecast for the next year downwards, pointing to the expectations for an increase in global oil stocks by the end of 2023. 

In the EIA’s “December 2022 Short-Term Energy Outlook Report”, the average barrel price of Brent crude oil for the next year was estimated to be $92.36. This figure was $95.33 in the November report. The report predicted that global oil inventories will fall by 200,000 barrels per day in the first half of next year, but will increase by 700,000 barrels a day in the second half. In the report, which stated that the possible increase in oil stocks at the end of next year will put pressure on oil prices, it was noted that the oil price forecast was revised downwards for this reason. In the report, it was stated that the annual production of the Organization of Petroleum Exporting Countries (OPEC) will reach 34 million 110 thousand barrels per day this year and 34 million 520 thousand barrels per day next year. Global oil demand is expected to increase by 270 thousand barrels per day this year and reach 99 million 820 thousand barrels. It is predicted that this figure will be 100 million 820 thousand barrels next year.

Energy prices hit industrial production in Germany

Industrial production in Germany decreased by 0.1 percent in October as high energy prices put pressure on the manufacturing sector. Germany’s Federal Statistical Office (Destatis) has announced provisional data on industrial production for October. Accordingly, seasonal and calendar adjusted industrial production fell by 0.1 percent in October compared to the previous month. The expectations for industrial production in the markets were for a decrease of 0.6 percent. The data revealed that industrial production, excluding energy and construction, decreased by 0.4 in October compared to September. It was noteworthy that the production in energy-intensive industries decreased by 3.6 percent in October. Germany’s manufacturing sector has been struggling with low orders in recent months amid a cooling global economy, supply shortages and weakening demand.

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