Global markets remain on negative course

By Muhammed Said Tanil

ISTANBUL (AA) – Global markets followed a negative course with increasing concerns that the Fed may start lowering its policy rate later than expected according to Chairman Jerome Powell’s statements on Wednesday, as well as the ADP National Employment Data in the US.

Uncertainties regarding the timing and the pace of interest rate cuts by central banks, expected to start this year, continue as macroeconomic data releases keep affecting asset prices.

The number of the US Job Openings and Labor Turnover Survey's Job Openings increased by 8,000 in February compared to the previous month to 8.7 million, while factory orders soared 1.4% in the same period, above market expectations, according to data released on Tuesday.

These data point to buoyant economic activity in the US, fueling expectations that the Fed will not be in a hurry to cut interest rates, analysts say.

Meanwhile, the cautious statements by Fed officials have been effective in reducing risk appetite, as San Francisco Fed President Mary Daly and her Cleveland counterpart Loretta Mester said on Tuesday that they still expect the bank to cut rates three times this year, though they are in no hurry to start lowering borrowing costs.

Mester emphasized that she would not make prejudgments on the monetary policy meeting, though she did not rule out the possibility of a rate cut in June.

Though the US dollar index fell 0.1% to 104.7, a sales-weighted course was observed in bond markets following these developments, since the US 10-Year Bond rose above 4.4% on Tuesday, testing its highest level since November, ending the day at 4.35%, and standing at 4.36% on Wednesday.

The ounce price of gold broke a record of $2,288.5 on Wednesday as it carried its upward trend for the seventh consecutive trading day despite the strong US dollar and rising bond yields.

Expectations that interest rate cuts by major central banks on a global basis will begin this year support the ounce price of gold, and the appetite for gold remains strong despite possible postponements of interest rate cuts, analysts say.

Brent crude oil carried its upward trend to the fourth consecutive trading day on Tuesday as it rose above $89 per barrel, seeing its highest level since October, fueling inflation concerns.

The barrel price of Brent crude oil is currently trading at $88.7, down 0.3% compared to its previous close.

The shares of energy firms, such as Phillips 66, ExxonMobil, Pioneer Natural Resources, ConocoPhillips, and Occidental gained between 1.5% and 4%.

As for Bitcoin, its price fell below $65,000 on Tuesday as uncertainties regarding the Fed’s future decisions continue.

The decline in Bitcoin revealed the loss of value in cryptocurrency-related shares, as Coinbase’s share price fell 2.5%.

Bitcoin is currently trading at $66,300, up 1% compared to its previous close.

Meanwhile, Taiwan saw a 7.4 magnitude earthquake on Wednesday, causing the employees of the world’s largest chipmaker, Taiwan Semiconductor Manufacturing Co, to evacuate and production to be halted in some of its factories near the coast.

On the New York Stock Exchange, the Nasdaq index lost 0.95%, and the S&P 500 0.72%, while the Dow Jones index followed a horizontal course.

Index futures contracts in the US started the new day with a negative course on Wednesday.

European stock markets were also on a negative course on Tuesday, and all eyes turned to the leading Consumer Price Index (CPI) data in the eurozone on Wednesday, as analysts say that leading inflation data may increase volatility in the markets and have an impact on the pricing in money markets regarding the future decisions by the European Central Bank (ECB).

Short-term inflation expectations of consumers in the eurozone fell to the lowest level in the last two years, according to the ECB’s Consumer Expectations Survey on Tuesday.

The average inflation expectation of consumers in the eurozone for 12-month period fell from 3.3% to 3.1%.

Germany’s annual CPI decreased to 2.2% in March, which is its lowest level since April 2021, according to preliminary inflation data released on Tuesday.

The FTSE 100 index in the UK fell 0.22%, the MIB 30 index in Italy 1.22%, the DAX 40 index in Germany 1.13%, and the CAC 40 index in France 0.92% on Tuesday.

Index futures contracts in Europe started Wednesday on a negative course.

As for Asia, equity markets in the region were also on a downward trend, according to the news that the TSMC suspended its chip production after the earthquake in Taiwan, which put pressure on companies in automotive, technology, and AI sectors.

Caixin service sector Purchasing Managers' Index (PMI) in China rose to 52.7 in March, expanding for the 15th consecutive month, according to data released on Wednesday.

Whereas in Japan, the service sector PMI remained below expectations with 54.1 in the same month.

Near the close, the Nikkei 225 index in Japan decreased 0.7%, the Kospi index in South Korea 1.4%, the Hang Seng index in Hong Kong 1%, and the Shanghai composite index in China 0.2%.

In Türkiye, Borsa Istanbul followed a seller-oriented course, as the BIST 100 index completed the day at 9,040.87 points with a 1.27% loss on Tuesday.

On Wednesday, Türkiye's annual inflation rate was announced as 68.5%.

The Eurostat also revealed the annual inflation rate of the euro area, 2.4% in March.

The US dollar/Turkish lira (USD/TRY) exchange rate completed the day at 32.0525 on Tuesday, down 0.6% its previous close as it followed a selling course.

The exchange rate between the two currencies currently stands at 32.0480 as of 12.21 p.m. (0921GMT).

*Writing and contributions by Emir Yildirim