Global markets follow mixed course while all eyes turn on ECB’s monetary policy decision

By Murat Aslan

ISTANBUL (AA) – Global markets followed a mixed course last week due to selling pressure in technology stocks, while all eyes turned to the monetary policy decision to be made by the European Central Bank (ECB).

Global markets are influenced each passing day due to the upcoming presidential election in the US.

Former US President Donald Trump surpassed President Joe Biden in the polls after the assassination attempt on the Republican candidate on July 13.

As Trump’s re-election potentiality raises concerns over possible trade wars, Biden’s continued rhetoric led the increased selling pressure in technology stocks.

The Biden administration is considering using the most severe trade restrictions if firms such as the Japanese chipmaker Tokyo Electron and the Dutch semiconductor company ASML Holding continue providing China with access to advanced chip technologies, according to a report by Bloomberg released on Wednesday.

Donald Trump said in a Bloomberg Businessweek interview that Taiwan took “100% of chip business” in the US , for which Tawian “should pay the US for defense,” pressuring chipmaker shares.

Given this news, the shares of US-based chipmakers declined, as Nvidia shares fell 6.6%, Broadcom 7.9%, AMD 10.2%, and Qualcomm 8.6%.

Additionally, the shares of US tech giants also saw a negative trend, as Microsoft shares declined 1.3%, Alphabet (Google) 1.5%, Apple 2.5%, Amazon 2.6%, and Meta Platforms 5.7%.

Meanwhile, the Fed’s Beige Book released on Wednesday said that the overall economic activity in the US continued to grow at a “modest pace.”

“Expectations for the future of the economy were for slower growth over the next six months due to uncertainty around the upcoming election, domestic policy, geopolitical conflict, and inflation,” said the report.

US data released on Wednesday revealed that the industrial production surpassed expectations, and the possibility of a soft landing continues to support risk appetite, analysts say.

Meanwhile, volatility in bond markets continued to remain limited, as the US 10-Year saw its lowest daily closing since March 13 with 4.16%.

The ounce price of gold completed Wednesday at $2,483, down 0.4% on a daily basis, after breaking a record at $2,483. The ounce price of gold currently trades at $2,469, up 0.4%.

The US Dollar Index balanced at 103.8 and Brent crude oil is currently traded at $84.6 per barrel.

US-based pharmaceutical firm Johnson & Johnson’s shares gained 3.7% after the firm’s financial report came in above expectations in the second quarter.

As for Europe, the stock markets in the region followed a mixed course on Wednesday, as the ECB’s monetary policy decisions and the bank’s President Christine Lagarde’s statements were focused on by investors.

The ECB’s decision to leave its policy rate unchanged on Thursday remains certain in the money markets.

Meanwhile, the annual inflation in the eurozone was 2.5% in line with expectations, according to data released on Wednesday.

However, the UK’s annual inflation, which was expected to fall 1.9%, came in at 2%, leading to the pricing in the money markets towards a rate cut in August by the Bank of England losing strength.

The FTSE 100 index in the UK rose 0.28% and the MIB 30 in Italy 0.03%, while the CAC 40 in France fell 0.12%, and the DAX 40 in Germany 0.44% on Wednesday. European index future contracts started Thursday with an increase.

As for Asia, a mixed course stood out in equity markets, as the possibility that the US may prevent chip sales to China caused risk perception to remain strong.

The US dollar/Japanese yen parity continued its downward trend, falling 1.4% to 156.17 on Wednesday, currently hovering just below on Thursday.

The Nikkei 225 index in Japan declined 2.2% and the Kospi in South Korea 1.2%, while the Shanghai Composite index in China rose 0.2% and the Hang Seng in Hong Kong 0.4% near the close on Wednesday.

In Türkiye, the BIST 100 index followed a horizontal course on Wednesday, completing the day at 11,134.08 points, down 0.05% its previous close.

The US dollar/Turkish lira exchange rate completed the day at 33.0794 on Wednesday, and it is currently at 33.0970 on Thursday, up 0.1% its previous close, following a buying course.

*Writing by Emir Yildirim