While the fear of recession in global markets is getting stronger, the selling trend is deepening in many assets.
Yesterday, after the indices depreciated by around 4 percent in the New York Stock Exchange , the S&P 500 index dropped 20 percent from its peak in January, confirming the technical bear market.
While the selling trend, which is also effective in the bond markets, carried the bond yields to regions that have not been seen for a long time, the 10-year bond yield of the USA reached the highest level of the last 11 years with 3.36 percent. The inverting yield curve of the US 3, 5, 10 and 30-year bonds also continues this trend.
The dollar index rose to 105.2, the highest level of nearly 20 years, due to the increasing demand for dollars in the markets with these developments.
It is noteworthy that as of this morning, the Fed's position as the strongest expectation regarding the interest rate decision, after the 75 basis point interest rate hike, which Fed officials had previously described as improbable, was included in the pricing yesterday.
In pricing in money markets, it is estimated that the Fed will increase interest rates by 75 basis points at its meeting, which will start today with a 96 percent probability and whose decisions will be announced tomorrow. On the other hand, after yesterday's pricing, it is predicted that the Fed will increase the policy rate to 4 percent by the middle of 2023.
While the selling pressure in the global markets was also effective in cryptocurrencies, institutions such as Celsius and Binance suspended the withdrawal of money for a while yesterday, deepening the sale of cryptocurrencies. Bitcoin saw its lowest level since December 2020 with 20,846 in the new day after losing 15 percent yesterday.
With these developments, the S&P 500 index fell 3.89 percent, the Nasdaq index 4.68 percent and the Dow Jones index 2.79 percent in the New York stock market yesterday. Index futures contracts in the USA started the new day with an increase of close to 1 percent.
Although the fear of rising inflation in Europe has not yet triggered the fear of recession as much as it did in the USA, pricing has started to indicate that the European Central Bank (ECB) may not have the space it expects in monetary policy decisions.
Accordingly, while it is predicted that there will be a 125 basis points increase in interest rates in the money markets as of October, it is estimated that the ECB will increase interest rates by 50 basis points at least twice, in this case.
While the 10-year bond yields of the regional economies reached the highest level since 2013 with the increasing sales pressure yesterday, Italy's 10-year bond yield exceeded 4 percent.
While this situation poses a problem for some European countries such as Italy and Greece, which are over-indebted, the ECB is following the issue closely.
While ECB officials continued their hawkish statements yesterday, after the increasing selling pressure in the bond markets yesterday, the possibility that the BoE may increase interest rates by more than 25 basis points at the meeting on Thursday is also getting stronger.
While the aforementioned developments dominated the equity markets in the region, the DAX 30 index was 2.43 percent in Germany, the FTSE 100 index was 1.53 percent in the UK, the CAC 40 index was 2.67 percent in France and the FTSE MIB 30 index in Italy. The index lost 2.79 percent. Index futures contracts in Europe started the new day with an increase.
While Asian stock markets were selling in line with the global markets, the Bank of Japan's (BoJ) increase in bond purchases to protect its yield curve target eroded the selling pressure.
Contrary to the hawkish policies that have become quite aggressive around the world, the BOJ maintained its dove stance, while the concerns that the BOJ would not be able to stick to its yield curve control targets increased the severity of the selling pressure in the bond markets.
Accordingly, although it is claimed that the bank, which has not yet taken a step to protect the new value that continues to depreciate against the dollar, may suspend its bond purchases, the bank has increased its bond purchases, including long-term assets.
Although the said step provided some relief in the worried bond markets, it is priced that the 10-year bond yield of Japan, which is at the level of 0.25 percent in the money markets today, will increase to 0.31 percent in 3 months.
On the other hand, according to the macroeconomic data announced in the region, industrial production in Japan decreased by 1.5 percent monthly and 4.9 percent annually in April, while capacity utilization remained unchanged.
Near the closing, the Nikkei 225 index in Japan lost 1.3 percent, the Shanghai composite index in China fell 0.5 percent, the Hang Seng index in Hong Kong fell 0.2 percent and the Kospi index in South Korea lost 0.5 percent.
BIST 100 index in Borsa Istanbul , which followed a sales-weighted course in parallel with the global markets yesterday, closed the day at 2.510.14 points with a decrease of 1.30 percent.
Dollar/TL , on the other hand, is trading at 17,2650 at the opening of the interbank market today, after closing at 17.2628 with an increase of 0.8 percent yesterday.
Analysts stated that the data agenda is calm in the country today, while the Consumer Price Index (CPI) and ZEW indices in Germany, unemployment in the UK and Producer Price Index (PPI) in the USA will be followed abroad. He noted that the volatility in the markets may continue until the interest rate decision.
Stating that investors should act cautiously in this process, analysts said that technically, 2.480 and 2.440 levels in the BIST 100 index stand out as support and 2.560 points as resistance.
The data to be followed in the markets today are as follows:
09.00 England, unemployment rate for April
09.00 Germany, CPI for May
12.00 Germany, June ZEW economic confidence index
12.00 Eurozone, June ZEW economic confidence index
15.30 US, May PPI
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