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Global markets await historic ECB decision

While a positive trend emerged in the global markets with the weakening of the selling trend in the bond markets, today the eyes were turned to the interest rate decision of the European Central Bank (ECB).

Global markets await historic ECB decision

While the global markets showed a positive trend with the weakening of the selling trend in the bond markets, today the European Central Bank (ECB) interest rate decision and the ECB President Christine Lagarde's statements and the speech of the US Federal Reserve (Fed) Chairman Jerome Powell.

Continuing recession and inflation concerns around the world continue to have an impact on asset prices.

While the barrel price of Brent oil fell to the lowest level since January 2022 due to the concerns about the global economy, the bond and stock markets followed a buying-heavy course with the expectations that the inflation might slow down in the USA.

The statements of Fed officials were also in the focus of the markets yesterday.

Fed Vice Chairman Lael Brainard warned that tightening will increase risks at some point, while emphasizing that they will fight "no matter how long it takes" to reduce inflation. Stating that the policy rate will need to increase further, Brainard said that monetary policy will need to be restrictive for a while to provide confidence that inflation has fallen to the 2 percent target.

Cleveland Fed President Loretta Mester also stated that she does not expect the economy to enter a recession, but that the risks related to it are increasing. Noting that he is not convinced that inflation has peaked yet, Mester noted that he believes the Fed has more work to do to control inflation.

In the Fed's "Beige Book" report, which includes evaluations on the current situation in the American economy, it was stated that economic activity has not changed since the beginning of July.

The report pointed out that the outlook for future economic growth remains generally weak, and although price levels remain high, growth rates in most regions have moderated to some extent.

After these developments, the Fed's price hike by 75 basis points with a 76 percent probability at its meeting on September 21 continues, while Fed Chairman Powell's statements are expected to affect asset prices and expectations today.

With the buying-weighted course in the bond markets, yesterday the dollar index returned from the peak of the last 20 years, and stood at 109.7 on the new day.

While the barrel price of Brent oil is currently trading at $88.5, 1.2 percent above the previous close, after yesterday's 5.7 percent decline, the ounce price of gold, which rose by 1% yesterday, is at $1,715 with a 0.2 percent decrease compared to the previous close.

On the other hand, central banks around the world continue to take hawkish steps. The Bank of Canada raised the overnight rate by 75 basis points to 3.25 percent, the highest level since April 2008.

With these developments, the S&P 500 index rose by 1.83 percent, the Nasdaq index by 2.14 percent and the Dow Jones index by 1.40 percent in the New York stock market yesterday. Index futures contracts in New York stock market continue their buying weighted course on the new day.

While eyes in Europe turn to the monetary policy decisions to be announced by the ECB and the statements of ECB President Lagarde, it is estimated that the bank will increase the policy rate by 75 basis points for the first time in its history, with a 69 percent probability in the pricing of money markets.

Investors focus on Lagarde's clues about the bank's stance in the face of the energy crisis affecting the region and record levels of inflation.

On the other hand, natural gas contracts for September delivery have been in a downward trend for three days, falling 13 percent to 207 euros yesterday.

The euro/dollar parity, which gained 1 percent value yesterday with the weakening of the dollar, closed the day above 1 level, and is just below 1 in the new day.

Sterling/dollar parity, on the other hand, rose above 1.15 again, making up for its losses after seeing its lowest level since 1985 with 1.4053 yesterday.

With these developments, the FTSE 100 index depreciated by 0.86 percent in the UK yesterday, while the DAX 40 index increased by 0.35 percent in Germany. The CAC 40 index in France and the FTSE MIB 30 index in Italy remained flat. In Europe, index futures contracts started the new day with rising.

A positive trend is evident in Asian stock markets, parallel to the New York stock market this morning.

According to the macroeconomic data announced in the region, Japan's economy grew by 0.9 percent quarterly and 3.5 percent annually in the second quarter of the year, surpassing expectations.

Concerns that the ongoing drought in China and the new type of coronavirus (Kovid-19) epidemic will negatively affect production continue.

The dollar/yen parity, which closed at 143.7 with an increase of 0.7 percent yesterday, is at the highest level of the last 24 years with 144.1 with an increase of 0.2 percent in the new day.

With these developments, Nikkei 225 index gained 2.24 percent in Japan, Shanghai composite index gained 0.1 percent in China and Kospi index gained 0.38 percent in South Korea, while Hang Seng index gained 0 percent in Hong Kong. 53 depreciated.

Domestically, Borsa İstanbul share market continued to record records yesterday.

Yesterday, the BIST 100 index closed the day with an all-time high of 3,402.81 points, with a gain of 0.34 percent.

Dollar/TL is trading at 18.2310 at the opening of the interbank market today, after closing at 18.2271 with a flat course yesterday.

Analysts stated that weekly money and bank statistics in the country, the ECB's interest rate decision abroad, as well as the speeches of Lagarde and Powell, as well as weekly unemployment applications in the USA will be followed. He said the score is in the support position.

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

14.30 Turkey, weekly money and bank statistics

15.15 ECB's interest rate decision

15.30 US, weekly jobless claims

15.45 Press conference of ECB President Lagarde

16.10 USA, Fed Chairman Powell's speech


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