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What will be the interest rate decision of the Fed and the CBRT?

While the global stock markets followed a positive course with the decreasing inflation in the USA, the eyes were turned to the intense macroeconomic data agenda in the next week with the interest rate decision of the central banks in Japan and Turkey.

What will be the interest rate decision of the Fed and the CBRT?

Inflation concerns in the United States, which has been in the dilemma of inflation and recession for a long time, have begun to decrease, albeit to a limited extent.

According to the data released during the week, the Consumer Price Index (CPI) in the United States decreased by 0.1 percent monthly in December, while it increased by 6.5 percent y-o-y.

Analysts said that despite the softening in inflation, rents continued to remain relatively high and the strong course of indicators on labor markets dampened the upward movement in the share markets.

The Fed will announce its interest rate decision

Along with the said data flow, the members of the US Central Bank (Fed) also gave verbal guidance, while expectations in money markets that the bank will raise interest rates by 25 basis points next month exceeded the level of 90 percent.

St. Louis Fed President James Bullard was strong labor market, noting that despite the slowdown in CPI inflation is still high, and the Fed's target interest rate of 5 percent preferred to be made on it as soon as possible if it's going to be voiced.

Richmond Fed President Thomas Barkin also stated that the 2 percent inflation target should be met for the Fed to maintain its credibility, noting that there is no need for aggressive increases in interest rates like last year due to slowing inflation.

Philadelphia Fed President Patrick Harker said that the worst of the increase in inflation is probably behind us, and it is time for the Fed to move to 25 basis point rate increases in future interest rate decisions.

Analysts said that the intense macroeconomic data that will be announced around the world next week will have an impact on the direction of the markets and that the Fed members' verbal guidance will continue to be the focus of investors.

Pointing out the importance of the clues regarding the steps to be taken by the Fed after February, analysts stated that the expectations that the Fed may pause interest rate hikes in March have started to strengthen after the weakening inflation in the markets.

The highest level since May 2022

On the commodity side, the positive expectations for the Chinese economy continued to support oil and copper prices, while the ounce price of gold also rose to the highest level since May 2022 with predictions that the Fed may soften its hawkish policies.

Last week, the price of Brent oil rose by 8.9 percent to $ 85.6 per barrel, a pound of copper gained by 7.9 percent to $4.1, and the price of gold an ounce rose by 2.9 percent to $1,920.7.

In the US, eyes were turned to the Fed's Beige book report and balance sheets

While the US equity markets followed a receptive course last week, the intense data agenda, especially the Fed's Beige Book Report, which will be announced on Wednesday next week, has settled into the focus of investors.

Although the macroeconomic data announced in the country have eased inflation concerns for now, the waters do not seem to have settled on the inflation side in the United States yet.

Analysts noted that the Fed's Beige Book Report will be looking for clues about the future of monetary policy, noting that signals about the economy are expected to have an impact on asset prices in the busy data calendar.

Noting that the fourth quarter balance sheet period has begun in the United States, analysts reported that the first financial results announced were mostly below expectations.

Last week on the New York stock exchange, the S&P 500 gained 2.67 percent, the Nasdaq index gained 4.82 percent and the Dow Jones index gained 2 percent.

In the data calendar of the week starting January 16, Tuesday; New York Fed industrial index, Wednesday; retail sales, Producer Price Index (PPI) industrial production and capacity utilization, Thursday; Friday with building permits, housing starts and the Philadelphia Fed manufacturing index; second-hand house sales will be followed.

The messages to be given by ECB President Lagarde in Europe have settled in the focus of investors

A positive course was followed on European stock markets last week with energy prices declining due to the influence of unseasonably high air temperatures and the removal of new type coronavirus (Covid-19) measures in China, one of the most important commercial partners of the region.

Analysts said that together with the intense macroeconomic data to be announced across the region next week, the monetary policy messages in the speeches of European Central Bank (ECB) President Christine Lagarde on Thursday and Friday may increase the volatility in asset prices.

Noting that the leading inflation data released in the region were below expectations and increased risk appetite in the markets, analysts said that investors' forecasts that the ECB may soften its hawkish stance on monetary policy have strengthened.

Analysts reported that the fourth quarter balance sheet period, which began in the region, may also increase volatility in the markets.

According to the data announced during the week, industrial production in the Eurozone increased by 2 percent annually, outpacing expectations, while the foreign trade deficit was significantly lower than forecasts at 11.7 billion euros.

Last week, the FTSE 100 index in the UK rose by 1.88 percent, the CAC 40 index in France rose by 2.37 percent, the DAX index in Germany rose by 3.26 percent and the MIB 30 index in Italy rose by 2.40 percent.

Next week, unemployment in the UK, CPI and ZEW expectation indices in Germany, CPI in the UK and Eurozone on Wednesday, and PPI in Germany on Friday will be followed.

In Asia, eyes are turned to the BOJ

While a buying-weighted course was observed in Asian stock markets last week, eyes were turned to the monetary policy decisions of the Bank of Japan (BoJ) next week.

With Japan's 10-year bond interest rate exceeding 0.5 percent, the BoJ is going on an unscheduled bond purchase for the second time this month, while volatility continues in the bond markets.

Analysts noted that rumors in the markets that the BOJ may increase the volatility December of bond rates again at the meeting to be held next week have been effective in the rise in Japanese bond rates, and the bank is not expected to change the policy rate.

During the week, expectations that China will lift the measures in the new type of coronavirus (Covid-19) outbreak and support the economy supported the share markets.

The South Korean Central Bank today raised its policy interest rate by 25 basis points to 3.50 percent, within expectations.

According to the data released in the region, Tokyo CPI in Japan increased by 4 percent annually, far outpacing expectations, while this increase marked the strongest inflation in the last 41 years.

While dollar-based exports in China decreased by 9.9 percent annually in December, the foreign trade surplus exceeded expectations with 78 billion dollars.

With these developments, the Nikkei 225 index in Japan rose by 0.56 percent on a weekly basis, the Shanghai composite index in China rose by 1.19 percent, the Hang Seng index in Hong Kong rose by 3.56 percent and the Kospi index in South Korea rose by 4.20 percent.

In the data calendar of the week that started with January 16, the data on growth, industrial production and retail sales in China on Tuesday, industrial production and capacity utilization rate in Japan on Wednesday, foreign trade balance in Japan on Thursday and inflation in Japan on Friday will be followed.

The CBRT will announce the interest rate decision

Domestically, the BIST 100 index on the Borsa Istanbul Stock Exchange fell by 6.68 percent last week with the ongoing selling pressure, ending the week at 4,984.86 points, while next week the eyes were turned to the monetary policy decisions of the Central Bank of the Republic of Turkey (CBRT) on Thursday.

The dollar/TL ended the week at 18.7849, 0.33 percent above the previous weekly close.

Analysts said that in the BIST 100 index, from a technical point of view, the 4.900 and 4.700 levels may stand out as support, and the 5.000 and 5.100 points may stand out as resistance.

Next week, domestic budget balance on Monday and housing sales and housing price index data on Tuesday will be followed.

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