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Global markets focus on intense data agenda

While volatility increases in global markets due to inflation, recession and concerns that the US Federal Reserve (Fed) will maintain its "hawk" stance at its meeting next week, the intense data agenda will be followed today.

Global markets focus on intense data agenda

After the August inflation data in the USA came above the expectations with 8.3 percent, the decline in the global stock and bond markets the previous day left its place to a fluctuating course with high volatility yesterday.

The probability of a rate hike is 70 percent and 30 percent, respectively.

While the possibility that the Fed will increase interest rates by 100 basis points for the first time since the 1990s, when it started the federal funding rate policy, entered the pricing, expectations that it will maintain its aggressive stance in the November and December meetings strengthened. Currently, in the money market pricing, the probability of a 75 and 100 basis point rate hike by the Fed is 70 percent and 30 percent, respectively.

While the data announced, especially in Europe and China, indicate that the growth has lost power, keeps the recession concerns alive, while the international credit rating agency Fitch Ratings reduced its 2022 growth expectation for the global economy from 2.9 percent to 2.4 percent. On the macroeconomic data side, the Producer Price Index (PPI) in the USA carried its decline to the second month, decreasing by 0.1 percent in August, while it was below the expectations with 8.7 percent annually.

Recession concerns rise

After the data pointing out that the cost pressures on the producer side have eased, the desire to recover in the New York stock market came to the fore yesterday. The Dow Jones index gained 0.10 percent, the S&P 500 index gained 0.34 percent and the Nasdaq index gained 0.74 percent. The US 10-year bond yield was stabilized at 3.43% after hitting its highest level in three months with 3.47 percent yesterday. The dollar index, on the other hand, retreated from 110, albeit limited, to 109.7. In the index futures contracts of the USA, it is seen that the new day started horizontally and the cautious course continues before today's intense data flow.

On the European side, while the concerns about the energy crisis remain at the center of the agenda as the winter months approach, the measures including the additional tax on the companies operating in the sector due to the rising electricity and natural gas prices cause the recession concerns to deepen. The company's shares fell more than 18 percent yesterday following the news that the German government was considering the expropriation of Uniper, in which Finnish public company Fortum has a majority stake, during the energy crisis that gripped Europe.

With these developments, DAX 40 index decreased by 1.22 percent in Germany, FTSE 100 index decreased by 1.47 percent in England and CAC 40 index decreased by 0.41 percent in France, while FTSE MIB 30 index increased by 0.49 percent in Italy. Euro/dollar parity followed a horizontal course and traded at 0.9970, while European index futures contracts started the new day with a limited rise.

On the Asian side, the People's Bank of China (PBoC) paused its monetary policy easing steps and left the 1-year policy rate (MLF) at 2.75 percent. In Japan, on the other hand, exports increased by 22.1 percent on an annual basis in August, but remained below expectations, while imports increased by 49.9 percent, exceeding market expectations.

On the other hand, while the statements of the officials regarding the weak yen profile increased the expectations for a direct intervention from the Bank of Japan (BoJ), Japan's Chief Cabinet Secretary Matsuno Hirokazu said yesterday that they are ready to take the necessary steps without eliminating any option if the current currency movements continue. With the news that BOJ is controlling the interest rate on foreign exchange purchases and sales yesterday, the dollar/yen parity fell from the critical threshold of 145 and stabilized at 143.5. With these developments, Asian stock markets started the new day with mixed movements, while the Shanghai composite index in China decreased by 1.4 percent and the Nikkei 225 index in Japan increased by 0.2 percent near the closing.

Domestically, the BIST 100 index, which started the day with a decline yesterday, started to rise with the purchases that came close to the closing and closed the day at 3,446.96 points with a 0.59 percent gain. Dollar/TL is traded at 18.2530 at the opening of the interbank market today, after closing at 18.2376 with a decrease of 0.1 percent yesterday.

Analysts said that after the inflation data announced in the USA, the hopes that the Fed will soften its monetary policy stance in the next week's meeting were shelved, and that the first shock in the markets was left behind with the pricing of the expectations that aggressive interest rate hikes will continue.

Emphasizing that the fluctuating course in the markets may continue until the Fed's meeting, analysts stated that the intense data agenda will be followed today at home and abroad. Analysts stated that, technically, the levels of 3.360 and 3.280 in the BIST 100 index became support, and 3.500 and 3.550 points became resistance.

The data to be followed in the markets today are as follows:

10.00 Turkey, foreign loan debt of the private sector in July

10.00 Turkey, house sales in August

11.00 Turkey, August budget balance

12.00 Eurozone, foreign trade balance in July

14.30 Turkey, weekly money and bank statistics

15.30 US, weekly jobless claims

15.30 US, September Philadelphia Fed Manufacturing Index

15.30 US, September New York Fed Manufacturing Index

15.30 US, August retail sales

16.15 USA, August industrial production and capacity utilization rate

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