While the concerns about the impact of high inflation and interest rate environment on the economies continued to be the main factors shaping the markets, the warnings of international institutions regarding the recession risk, despite the hawkish statements from the central bank officials, became the focus of the agenda.
The United Nations Conference on Trade and Development (UNCTAD), in its report published yesterday, reported that the continued increase in interest rates by central banks in developed countries risks pushing the global economy into recession and then into a prolonged recession. Following UNCTAD's report, International Monetary Fund (IMF) Director Kristalina Georgieva also urged the US Federal Reserve (Fed) to be extremely cautious in its policies and be mindful of its impact on the rest of the world.
Despite the aforementioned warnings, verbal directions in a "hawk" tone continued to come from the US Federal Reserve (Fed). Richmond Fed President Thomas Barkin stated that a more inflationary environment requires a tighter policy, while New York Fed President John Williams said that they have more work to do to reduce inflation.
On the macroeconomic data side, the ISM manufacturing index in the USA fell to 50.9 yesterday, the lowest level since May 2020.
With these developments, a positive trend was observed in the New York stock market yesterday. The Dow Jones index gained 2.66 percent, the Nasdaq index gained 2.27 percent and the S&P 500 index gained 2.59 percent. The dollar index fell 0.5 percent to 111.6, and the US 10-year bond yield fell from 3.83 percent to 3.62 percent. US index futures contracts started the new day with a rise.
On the European side, UK Finance Minister Kwasi Kwarteng announced yesterday that they are abandoning their plan to abolish the top 45 percent income tax bracket, which runs counter to the country's central bank policies. With the step back from the plan, which was subjected to serious criticism, the sterling/dollar parity gained 1.2 percent yesterday and rose above 1.13. The 10-year bond yields also declined rapidly in England, Germany and France.
On the macroeconomic data side, the manufacturing industry PMI for September, which was below the expectations in Germany and England, declined to 48.4 in the Euro Zone, pointing out that the contraction in the sector continues.
Although the announced data increased the concerns about the development of the economy, European stock markets followed a positive course with the rise in the shares of oil and gas companies yesterday. Volatility in banking sector shares remained high, led by Swiss Credit Suisse and German Deutsche Bank. With these developments, DAX 40 index gained 0.79 percent in Germany, FTSE 100 index gained 0.22 percent in England and CAC 40 index gained 0.55 percent in France. Euro/dollar parity started to rise and stabilized at 0.9830.
On the Asian side, the Hong Kong stock market will be closed today, while the Chinese markets continue to have a public holiday due to Golden Week. According to data released today in Japan, inflation in September was 2.8 percent annually, in line with expectations. The Reserve Bank of Australia, on the other hand, increased the policy rate by 25 basis points to 2.6 percent. Stating that they increased interest rates in a short time and this situation affected the households, the Bank stated that for this reason, it decided to slow down the pace of the movement. In the market, the Bank was expected to raise interest rates by 50 basis points.
On the other hand, according to the statement of the Ministry of Defense of Japan, after the ballistic missile launched by North Korea passed over the northeast of Japan and fell into the Pacific Ocean, the eyes were turned to the statements to be made on the subject.
With these developments, it is noteworthy that the new day started with a rise in the stock markets, while the Nikkei 225 index in Japan gained 2.8 percent, the ASX 200 index in Australia gained 3.6 percent and the Kospi index in South Korea gained 2.5 percent.
Domestically, Halkbank announced yesterday that its appeal regarding the ongoing criminal case in the USA has been accepted. With the spread of purchases in banking stocks following the development, the BIST 100 index finished the day at 3,392.13 points with a 6.67 percent gain. Dollar/TL, on the other hand, is traded at 18,5420 at the opening of the interbank market today, after closing at 18,5448 with an increase of 0.2 percent yesterday.
Analysts said that increasing "recession" warnings and weak economic data are expected to push central banks to loosen their "hawk" monetary policies, adding that the decline in global bond rates led by the UK also contributed to the recovery in risk appetite.
Pointing out that the fluctuation in the markets may continue for a while, analysts stated that today the focus of the investors is the statements of the Fed officials, while the real effective exchange rate in the country, factory orders in the USA and the Producer Price Index (PPI) in the Euro Area come to the fore on the data agenda.
Analysts stated that technically, 3,200 points in the BIST 100 index are in the position of support and the level of 3,500 in the resistance position.
The data to be followed in the markets today are as follows:
12.00 Euro Zone, August PPI
14.30 Turkey, September real effective exchange rate
17.00 US, factory orders for August
17.00 US, JOLTS job vacancies in August
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