Global markets remain on negative course

By Muhammed Said Tanil

ISTANBUL (AA) – Global markets remain on the negative course as the cautious tone in the statements of Fed officials on Monday contributed to the selling pressure’s gaining strength in equity markets, while uncertainties persist over the timing of the bank’s expected rate cuts.

Fed of Atlanta President Raphael Bostic said on Monday that he expects a single rate cut this year, as the pandemic-affected economic situation continues, and he expects the economy and inflation to slow down gradually.

Chicago Fed President Austan Goolsbee said he forecasts three interest rate cuts this year, though tentatively, as he said the story seems to have not changed fundamentally, adding that the progress on inflation is on the decline.

Fed Governor Lisa Cook underlined that the bank should take a cautious approach when cutting interest rates to allow more time for inflation to slow down in some parts of the economy.

Given these updates, the probability of the bank’s first interest rate cut in money markets fell to 70% in June after the cautious statements from Fed officials, analysts say, though the probability was at 75% prior to the statements.

Analysts stated that the statements from Fed officials, as well as the intense data agenda, will be monitored throughout the week, especially the growth data and personal consumption expenditures, which the Fed considers as an inflation indicator, as these indices may give signals regarding the following actions of the bank in the coming period.

Meanwhile, new home sales in the US fell 0.3% month-on-month to 662,000 in February, below market expectations, according to data released on Monday.

The median sales price of new homes for sale in the country decreased 7.6% year-on-year to $400,500 in February, reaching its lowest level in two and a half years.

In view of these changes, the US 10-Year Bond Treasury hiked 5 basis points on Monday, completing the day at 4.25%, though it is currently at 4.24%.

The ounce price of gold is hovering near its peak, as it is currently at $2,172, while the US dollar Index 104.2, just below its previous close.

Additionally, expectations that the OPEC+ group may continue production cuts keep on influencing oil prices up, in addition to geopolitical risks, as the barrel price of Brent crude oil climbed 1.2% on Monday, completing the day at $86.1, and currently it is trading above its previous close.

On the New York Stock Exchange, the Nasdaq index fell 0.27%, the S&P 500 index 0.31%, and the Dow Jones index 0.41% on Monday.

US index futures contracts started Monday on a negative course.

As for the European stock markets, they were mixed on Monday, and the statements of central bank officials and the macroeconomic data continue to be the focus of investors.

European Central Bank (ECB) chief economist Philip Lane said on Monday that the bank’s governing council has a broadening consensus on a possible rate cut, as there is increased confidence that the wage growth is slowing.

The EU announced that it has opened a non-compliance investigation against Apple, Alphabet, and Meta under the Digital Markets Act.

The FTSE 100 index in the UK lost 0.17%, while the MIB 30 index in Italy gained 0.86%, and the DAX 40 index in Germany 0.30%, whereas the CAC 40 index in France completed the day flat on Monday.

European index future contracts started Tuesday on a negative course.

The negative course was also seen in Asian equity markets, though it was of note that the Kospi index of South Korea tested a 2-year peak.

The declining risk appetite in global equity markets also affected the region, as the core inflation in Japan remained below expectations with an increase of 2.3%.

Japan’s Minister of Finance Shun'ichi Suzuki said on Tuesday that they will not rule out any measures to rein in the weakness in the Japanese yen.

Suzuki mentioned that the weak yen has positive and negative aspects for the economy, though the excessive volatility increases uncertainties for business operations.

Therefore, the US dollar/Japanese yen pair carried its downward trend to the third consecutive trading day, as it currently stands at 151.5, just below its previous close.

The Nikkei 225 index in Japan lost 0.1%, the Shanghai Composite index in China 0.4%, and the Hang Seng index in Hong Kong 0.1%, while the Kospi index in South Korea climbed 0.7% near the close.

As for Türkiye, Borsa Istanbul followed a fluctuating course on Monday, as the BIST 100 index completed the day at 9,029.38, down 0.90%.

The US dollar/Turkish lira (USD/TRY) exchange rate completed the day at 32.1469 on Monday, up 0.4% from its previous close as it followed a buying course.

The exchange rate between the two currencies stands at 32.1720 as of 11.28 a.m. (0828GMT).

* Writing by Emir Yildirim.