Global markets begin new week on cautious note

By Muhammed Said Tanil

ISTANBUL (AA) - Global markets began the new week on a cautious note due to polls in France, Iran, and the UK, as well as concerns about the upcoming US presidential election.

In the second round of early general elections in France, the left-wing New Popular Front (NFP) won the most seats in the National Assembly, while Masoud Pezeshkian, a reformist politician and cardiac surgeon, was elected president of Iran.

Meanwhile, Keir Starmer, the Labour Party's leader, took over as prime minister of the UK after 14 years of Conservative rule.

In the US, concerns over who will be the Democratic candidate instead of President Joe Biden still linger on, while Fed Chairman Jerome Powell’s future statements and inflation data to be released this week are expected to provide hints about the Fed’s monetary policy decisions.

US macroeconomic data released last week provided mixed signals on the labor market, as non-farm payrolls increased by 206,000 in June, exceeding expectations, while the May data was revised downward from 272,000 to 218,000.

The US unemployment rate climbed 10 basis points to 4.1%, the highest level since Nov. 2021, while average hourly earnings soared 0.3% to $35, within expectations.

Analysts stated that, while employment data increased above expectations in June, downward revisions to data from April and May indicated a softening in the labor market.

The slowdown in wage growth rate and increase in unemployment may lead to the Fed cutting interest rates in September with an 80% probability, analysts say.

Meanwhile, the probability of the first rate cut in November fell to 76%, while the chances of a second rate cut in December increased to 97% in the money markets.

Moreover, the US 10-Year Bond ended the day at 4.28%, down 8 basis points from Friday last week and currently at 4.30% on Monday.

The ounce price of gold gained 1.6% on Friday, closing at $2,392, its highest level in a month and a half, and currently trading at $2,385, down 0.3% from its previous close.

The US dollar index closed Friday at 104.9, down 0.2%, extending its downward trend for the fourth consecutive trading day, while hovering just above its previous close on Monday.

The barrel price of Brent crude oil fell 0.5% to $86.1, while uncertainties regarding Bitcoin continue, as Tokyo-based crypto exchange Mt. Gox began distributing stolen assets to their owners in 2014.

The world’s largest cryptocurrency Bitcoin opened the new week at $55,350, down 3.3%.

Meanwhile, the Nasdaq Composite index on the New York Stock Exchange rose 0.90% to 18,352, the S&P 500 soared 0.54% to 5,567, and the Dow Jones climbed 0.17% to 39,375.

European stock markets were negative on Friday except for Germany.

In the second round of French elections, the left-wing New Popular Front won the most seats, followed by President Emmanuel Macron's centrist Ensemble (Together for the Republic) alliance and the far-right National Rally (RN), which had won the first round.

Analysts said uncertainties have eased but have yet to vanish after the French elections, as investors remain cautious.

The FTSE 100 index in the UK fell 0.45%, the CAC 40 in France 0.26%, the MIB 30 in Italy 0.35%, while the DAX 40 in Germany soared 0.1%. European index futures started the new week with a mixed course.

In Asia, a sales-weighted course was seen, as the Japanese foreign trade surplus in May exceeded expectations at 2.8 trillion yen ($17.4 billion), while the US dollar/Japanese yen parity fell 0.1% to 160.6 on Monday.

The Nikkei 255 in Japan fell 0.1%, the Kospi index in South Korea by 0.1%, the Hang Seng in Hong Kong by 1.5%, and the Shanghai Composite in China by 0.6% near the close.

In Türkiye, the BIST 100 followed a fluctuating course on Friday, completing the day at 10,851, down 0.19% from its previous close.

The US dollar/Turkish lira exchange rate closed Friday at 32.6660, 0.3% higher than its previous close, after following a buying trend, and is currently trading at 32.6550 on Monday.

*Writing by Emir Yildirim