Global markets focus on Fed officials' speeches

ISTANBUL

As global markets try to rebalance after uncertainty due to the US Federal Reserve's (Fed) signals for earlier interest rate hikes, investors and analysts have set their eyes on speeches by Fed officials, including Jerome Powell.

While the Fed's hawkish stance and the expectation that it might raise interest rates in March continued to be priced in the stock markets, the statements of Fed Chairman Powell on Monday had a positive impact on the stock markets.

Powell said the bank will use its tools to support the economy and a strong labor market, as well as prevent high inflation from becoming permanent.

Recalling increasing economic activities caused permanent supply and demand imbalances and bottlenecks, he said this situation has caused high inflation but the bank is determined to achieve maximum employment and price stability targets.

While the indices in the New York stock market compensated for a significant part of their losses of up to 2% with Powell's statements, the Nasdaq index ended its 4-day downward trend on Monday.

On Tuesday, while the speeches of Kansas City Fed President Esther George and St Louis Fed President James Bullard, whose hawkish stance has come to the fore in the recent period, are at the center of the agenda, clues about the future of monetary policy will be sought in the statements.

Expectations that the Fed's first interest rate hike will be in March with a 90% probability continue.

With these developments, the US 10-year bond yield was stabilized at 1.77% on Monday, after rising to 1.80%, the highest level since January 2020.

On Monday, the New York stock market recovered most of its losses toward the end of the day, after starting the day with a hard selling course.

The S&P 500 index fell 0.14% and the Dow Jones index fell 0.45%, while the Nasdaq index gained 0.05%.

Equity markets in Europe, which were closed on Monday before Powell's statements, finished the day with a decline.

On Tuesday, the speech of Christine Lagarde, president of the European Central Bank (ECB), is in the focus of investors.

The FTSE 100 index lost 0.53% in the UK, the DAX 30 index lost 1.13% in Germany and the CAC 40 index lost 1.44% in France, while European indices are positive during Tuesday.

While mixed figures are observed in Asian stock markets on Tuesday, the rapid spread of the Covid-19 pandemic continues to pose a risk factor.

The continuation of the record number of cases in the countries of the region and measures increase the concerns over the economic recovery.

With these developments, Shanghai composite index decreased by 0.50% in China, Nikkei 225 index decreased by 1% and Kospi index in South Korea decreased by 0.06%, while Hang Seng index increased by 0.17% in Hong Kong.

In Turkiye, the BIST 100 index, which gained 0.58% on Monday, carried its upward trend for the sixth trading day in a row and completed the day at 2,045.16 points.

* Writing by Gokhan Ergocun