While the global markets started the new week with a negative trend as the protests against the “zero Kovid-19” policy in China spread throughout the country, this week’s eyes were turned to the intense data agenda, especially non-farm employment in the USA.
Protests and reactions to the Kovid-19 measures spread throughout the country after 10 people lost their lives in the fire that broke out in the apartment allegedly under quarantine in Urumqi, the center of China’s Xinjiang Uyghur Autonomous Region.
While the demonstrations brought along concerns about economic activity, they caused an increase in risk perception around the world.
While the data on the labor markets to be announced in the USA this week are expected to be decisive on the expectations before the US Federal Reserve’s (Fed) monetary policy decision in December, it is priced in the money markets that the bank will increase interest rates by 75% with a probability of 50 and with a probability of 25% by 75 basis points at the meeting next month. .
While the Fed officials, who gave verbal guidance throughout the last week, gave the green light to the 50 basis point rate hike, a slowdown in interest rate hikes was signaled in the Fed minutes.
However, the fact that spending was not at the expected level on “Black Friday” in the USA last week raised the question marks regarding the economy.
While a mixed course was observed in the bond markets with the said developments, the difference between the 10-year bond yield of the USA, which is considered as a recession signal for the coming period, and the yield of 3 low treasury bills, is at the widest level since December 2000, with minus 67 basis points.
Commodity prices started the new week with a decrease due to the increased recession risk and developments in China, while the dollar index stood at 106.4, 0.3 percent above the previous close in the new week.
The price of a barrel of Brent oil decreased by 3.4 percent to $81.2, copper to $3.6 a pound decreased by 0.8 percent and gold to $1,751 an ounce depreciation by 0.2 percent.
Analysts noted that developments in China are expected to have an impact on asset prices, adding that the news flow from the region may increase volatility in the markets.
On Friday, the New York stock market followed a mixed course, with the S&P 500 falling 0.03 percent and the Nasdaq index losing 0.52 percent, while the Dow Jones index rose 0.45 percent. Index futures contracts in the USA started the new week with a decrease.
While the fight against inflation continues to be the main agenda item in Europe, developments in China, one of the most important trade partners of the countries in the region, are closely followed.
While the European Central Bank (ECB) officials are planned to continue their verbal guidance this week, the expectation that the bank, which is amid recession and inflation risks, will raise interest rates by 75 basis points at the next meeting remains strong.
On the other hand, in the ongoing negotiations, the European Union countries have not yet reached an agreement on the ceiling price to be applied to Russian oil.
On Friday, the DAX 40 index in Germany remained flat, while the FTSE 100 index in the UK rose 0.27 percent and the CAC 40 index in France rose 0.08 percent. Index futures contracts in Europe started the new week with a decline.
While the protests that spread throughout the country in China increased the selling pressure in Asian stock markets, the news flow from the region is being followed closely.
On Friday, the People’s Bank of China (PBoC) lowered the “required reserve ratio,” which refers to the amount of cash banks and credit institutions must hold as reserves in exchange for their deposits. The said step was interpreted as a signal that the government would start to support the economy again.
With these developments, Shanghai composite index decreased by 1.4 percent in China, Hang Seng index decreased by 2.3 percent in Hong Kong, Nikkei 225 index decreased by 0.52 percent in Japan and Kospi index decreased by 1.4 percent in South Korea. .
Domestically, the BIST 100 index rose 0.33 percent on Friday, closing its all-time high with 4,874.34 points.
After closing flat at 18.6359 on Friday, Dollar/TRY is trading at 18.6240 at the opening of the interbank market today.
Analysts reported that the Dallas Fed manufacturing activity index came to the fore in today’s data agenda, and the news feed on the protests in China was in the focus of investors.
Stating that ECB President Christine Lagarde’s speech will also be followed, analysts noted that, technically, the BIST 100 index 4,900 and 5,000 levels are resistance and 4.830 and 4,680 points are support.
