Global markets see mixed course as central banks’ monetary policy decisions on horizon

ISTANBUL

Global markets saw a mixed course since the Fed and Bank of Japan (BoJ) will release their monetary policy decisions on Wednesday, as the global fight against inflation comes to a close.

Although the Fed will certainly leave its policy rate unchanged at 5.25% to 5.50% for the last time on Wednesday, asset prices will be influenced by the economic projections and Chairman Jerome Powell’s statements.

The Fed is estimated to cut its interest rates three times in the rest of the year, as per estimates in the money markets, and the employment report to be released on Friday is expected to provide insight in the bank’s future decision.

Meanwhile, the release of the financial reports of US-based trillion-dollar corporations, such as Microsoft, Apple, Amazon, and Meta Platforms, is estimated to increase stock and sector-based volatility.

The bond markets remained flat ahead of the Fed’s monetary decisions, as the US 10-Year is currently at 4.18% and the US Dollar Index is at 104.6%.

At the same time, the ounce price of gold is trading at $2,387, up 0.2% on Tuesday, while the barrel price of Brent crude oil is at $78.6 after following a flat course.

On the New York Stock Exchange, the Nasdaq index increased 0.07%, and the S&P 500 0.07%, while the Dow Jones index fell 0.12% on Monday, and the US index future contracts started Tuesday on a decline.

As for Europe, after following a sales-heavy course excluding the UK on Monday, growth in Germany and the eurozone were focused on by investors on Monday.

Concerns over economic activity in Europe strengthened after last week’s data, and more economic data to be announced on Monday will provide the necessary hints regarding the future steps of the European Central Bank (ECB), analysts said.

Given this news, the FTSE 100 index in the UK increased 0.08%, while the CAC 40 in France fell 0.98%, the DAX 40 in Germany 0.53%, and the MIB 30 in Italy 0.51%. European index future contracts started Tuesday on a mixed course.

Meanwhile, Asian equity markets saw a selling pressure, as uncertainties over the BoJ’s monetary policy decisions to be announced on Wednesday curb risk appetite.

The BoJ is estimated to leave its policy rate unchanged with a 70% probability, or increase it by 10 basis points with a 30% probability in the money markets.

At the same time, Japan’s unemployment rate fell to 2.5 in June according to official data.

Near the close, the Nikkei 225 index in Japan fell 0.1%, the Kospi index in South Korea 1.2%, the Hang Seng index in Hong Kong 1.2%, and the Shanghai Composite index in China 0.6% on Monday.

As for Türkiye, the BIST 100 index completed Monday at 10,733.75 points, down 1.45% its previous close.

The US dollar/Turkish lira exchange rate finished at 33.0778 on Monday, down 0.4%, and started Tuesday at 33.0660.

*Writing by Emir Yildirim