Global Markets in Search of Direction: Breaking News
Macroeconomic Factors and Financial Results Impact Asset Prices Ahead of Fed Policy Decisions
Investors and analysts are closely watching macroeconomic data and company financial results as they anticipate the upcoming monetary policy decisions by the US Federal Reserve (Fed). The Fed is expected to increase the policy rate by 25 basis points on July 26, but there is uncertainty surrounding the actions the central bank will take beyond this meeting.
The recent decline in the number of first-time jobless applicants in the US has raised questions and suggests a stronger employment report. This unexpected decrease has added to the uncertainty among investors, who are also concerned about the lagged effect of monetary policy decisions.
The direction of the markets will largely be influenced by the signals from the decision text of the upcoming meeting and the statements made by Fed Chairman Jerome Powell. Investors are closely analyzing these cues to determine the future trajectory of asset prices.
In terms of company financial results, Tesla’s shares have declined by almost 10 percent as their gross profit margin decreased to 18.2 percent in the second quarter of the year. Similarly, Netflix’s shares fell by more than 8 percent after their income fell below analysts’ expectations. On the other hand, Johnson & Johnson, a US pharmaceutical company, saw its shares increase by over 6 percent after reporting earnings that exceeded expectations.
The Fed also made an announcement regarding the launch of their new system for instant payments called “FedNow”. This development is expected to have a significant impact on the financial sector.
Moving on to economic indicators, the number of first-time unemployment claims applicants in the US dropped to 228 thousand in the week ending July 15. This is the lowest level in two months. However, second-hand home sales in the country decreased by 3.3 percent in June, hitting a 5-month low.
The Philadelphia Fed Manufacturing Index came in at minus 13.5 in July, below expectations, indicating that the contraction in the sector continues.
In the commodities market, the price of gold finished the day at $1,970 with a 0.4 percent decrease. Currently, it is showing a horizontal movement. Brent oil, on the other hand, saw a 0.8 percent increase from the previous close, trading at $80.2 per barrel.
In the New York stock exchange, the S&P 500 lost 0.68 percent, the Nasdaq index depreciated by 2.05 percent, while the Dow Jones index closed with a 0.47 percent increase. The futures contracts for these indices started the new day with a flat course.
Moving on to Europe, the European stock markets are experiencing a positive trend. However, all eyes are on the interest rate decision that will be announced by the European Central Bank (ECB) next week. While it is expected that the ECB will increase interest rates by 25 basis points at this month’s meeting, there is speculation that the Bank will raise rates by a total of 50 basis points by the end of the year.
Another important development in Europe is the ongoing Grain Corridor Agreement, which remains at the center of discussions.
In terms of economic indicators, Germany’s Producer Price Index (PPI) decreased by 0.3 percent monthly in June, but increased by 0.1 percent annually. The consumer confidence index in the Eurozone came in at minus 15.1.
In the European stock markets, the DAX 40 index in Germany gained 0.59 percent, the CAC 40 index in France rose by 0.79 percent, the FTSE 100 index in England increased by 0.76 percent, and the MIB 30 index in Italy saw a gain of 0.36 percent.
Moving to Asia, the stock markets are showing a mixed course following the announcement of inflation data in Japan. Last month, Japan’s annual inflation rate was 3.3 percent, surpassing expectations. Analysts believe that although inflation is above the Bank of Japan’s (BoJ) 2 percent target, the central bank is not expected to make any changes to its monetary policy. However, there is speculation that the BoJ may make policy adjustments at its meeting next week.
At the close of trading, the Nikkei 225 index in Japan lost 0.4 percent, the Shanghai composite index in China dropped by 0.2 percent, the Kospi index in South Korea gained 0.2 percent, and the Hang Seng index in Hong Kong increased by 0.5 percent.
In the domestic market, the BIST 100 index in Borsa Istanbul experienced an upward trend, gaining 1.69 percent and closing at 6,682.11 points. This marked the highest daily closing in history. The dollar to Turkish lira exchange rate at the opening of the interbank market today was 26.8450, following a decrease of 0.1 percent.
The Central Bank of the Republic of Turkey (CBRT) increased the one-week repo auction rate, which is the policy rate, by 250 basis points to 17.50 percent. The CBRT’s announcement stated that improvements in external financing conditions, foreign direct investments, reserves, and the current account balance supported by tourism revenues will contribute strongly to price stability.
Furthermore, the CBRT increased the daily limit of banks for rediscount credits of exporters by 5 times and required 15 percent required reserves to be set for exchange-protected accounts.
Additionally, the Capital Markets Board (CMB) approved the initial public offering of Asce Gayrimenkul Yatırım Ortaklığı at a price of 12.60 lira per share.
Analysts anticipate a calm data agenda both domestically and internationally for today. Technically, the resistance levels for the BIST 100 index are at 6,700 and 6,800, while the support levels are at 6,600 and 6,500 points.
