While a mixed course was followed in the global markets yesterday after the US Federal Reserve (Fed) accelerated the reduction in asset purchases despite not making any changes in interest rates, today the Central Bank of the Republic of Turkey (CBRT), the European Central Bank (ECB) and the Bank of England (BoE) will come out of their meetings. In addition to the decisions, an intense data agenda will be followed.
While keeping the interest rates unchanged at 0-0.25 percent at the last meeting of 2021, the rate of decrease in asset purchases increased from $ 15 billion to $ 30 billion per month. In the text of the decision, it was emphasized that it would be appropriate to apply similar reductions in the rate of asset purchases of the Fed Open Market Committee (FOMC) every month, but they are ready to adjust the pace of purchases if changes in the economic outlook require it. On the other hand, it was noteworthy that the "temporary" assessment of inflation was omitted from the text.
In the projections published by the bank regarding the economy, 3 interest rate hikes were pointed out for the next year, while inflation expectations were revised upwards.
Making statements after the decision, Fed Chairman Jerome Powell stated that economic developments and the outlook require a faster reduction in asset purchases, "The economy no longer needs an increasing amount of policy support due to rising inflation pressures and the rapidly strengthening labor market." said. Stating that the Omicron variant poses a risk to the economy, Powell said that they are rapidly moving towards maximum employment, but that labor force participation may not be strong for a while.
Analysts said that the Fed's decision text and Powell's statements gave "strong and clear" messages, and that although the guidance continued in a "hawkish" tone, it reduced the uncertainties regarding the course of monetary policies in 2022, and that this situation supported the stock markets.
Stating that the decisions of the ECB and BoE meetings on the European side, after the Fed, will be effective on the direction of the markets, analysts said that the CBRT's interest rate decision is expected in the domestic market.
While the ECB is not expected to change the policy rate, which was last reduced to zero in March 2016, the main focus of the markets will be the signals about the path to be followed regarding the Pandemic Urgent Purchase Program (PEPP). In the UK, although the interest rate hike expectations from the BoE have been postponed to February 2022 due to the harsh measures taken against the Omicron variant, it is seen that the number of those who think that the first move can come in today's meeting after the November inflation data announced yesterday.
After the developments, the indices that started the day unsteadily in the New York stock market yesterday turned their direction upwards, while the Dow Jones index gained 1.08 percent, the S&P 500 index gained 1.63 percent and the Nasdaq index gained 2.15 percent. After moving in the 96.2-97.0 band yesterday, the dollar index is flat at 96.4 today. It is seen that the index futures contracts of the USA started the new day positively.
On the European side, concerns over the Omicron variant remain high on the agenda, with annual inflation in the UK hitting 5.1 percent in November, its highest level since 2011. While the European stock markets, which were closed before the Fed's decisions yesterday, followed a mixed course, the DAX index in Germany rose by 0.15 percent, the CAC 40 index in France increased by 0.47 percent, and the FTSE 100 index in the UK decreased by 0.66 percent. After closing at 1.1288 with an increase of 0.3 percent yesterday, the euro/dollar parity is on a horizontal course today. European index futures contracts, on the other hand, started the new day with buyers before the ECB and BoE meetings.
While it is observed that the new day started with a buying-heavy course in Asian stock markets, according to the data announced today, exports in Japan increased by 20.5 percent and imports by 43.8 percent in November. As a result of the rapid increase in imports, the foreign trade balance in the country gave a deficit of 954.8 billion yen, well above the expectations. Close to the closing, Japan's Nikkei 225 index gained 2 percent, Shanghai composite index gained 0.5 percent and Kospi index in South Korea gained 0.3 percent, while Hang Seng index in Hong Kong decreased by 0.4 percent.
Domestically, the BIST 100 index in Borsa Istanbul closed the day with an all-time high, closing the day at 2,162.26 points with an increase of 0.21 percent. Dollar/TL, on the other hand, is trading at 14.85 levels at the opening of the interbank market today, after closing at 14.8061 with an increase of 2.8 percent yesterday.
Analysts said that, following the Fed's guidance yesterday, the decisions to be taken from the ECB and BoE meetings on the European side today are expected to clarify the outlook for the course of monetary policies in 2022.
Analysts stated that the CBRT's interest rate decision will be followed in the country today, and on the macroeconomic data side, the service sector and manufacturing industry Purchasing Managers Index (PMI) in the Euro Zone, weekly unemployment applications, industrial production and housing starts in the USA have come to the fore.
Analysts reported that technically, the BIST 100 index's 2.200 and 2.250 levels are in the resistance position and 2.030 points are in the support position.
The majority of economists who participated in the expectations survey of AA Finans regarding the CBRT Monetary Policy Committee meeting predict that the policy rate will be reduced by 100 basis points to 14 percent. Expectations that interest rates may remain constant in the market are also not ignored. The CBRT cut the policy rate by 100 basis points from 16 percent to 15 percent at the MPC meeting in November.
The data to be followed in the markets today are as follows:
11.30 Germany, December manufacturing and service sector PMI
12.00 Eurozone, manufacturing and services PMI for December
12.30 UK, December manufacturing and services PMI
14.30 Turkey, CBRT's interest rate decision
14.30 Turkey, October Housing Price Index
15.00 UK, BoE's interest rate decision
15.45 Eurozone, ECB's interest rate decision
16.30 Eurozone, Speech by ECB President Lagarde
16.30 US, weekly jobless claims
16.30 US, November housing starts
16.30 US, December Philadelphia Fed Manufacturing Index
17.15 US, November industrial production and capacity utilization rate
17.45 US, December manufacturing and services PMI
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