Although signals from the Fed’s next-term meeting last week showed the bank issuing a dovish report for the first time in a long hiatus, the hawkish leadership of Fed officials dampened risk appetite.
As statements from bank officials continued, Chicago Fed President Austan Goolsbee said the Fed had not made a pre-commitment to an early and rapid rate cut and that the rise in market expectations was at odds with the bank’s operations.
San Francisco Fed President Mary Daly said in an interview that interest rate cuts may be necessary next year to prevent excessive tightening.
Daly said that if inflation continues its steady decline in recent months, the Fed will be relatively tight even though the key rate will be cut three times next year.
INTENSIVE DATA AGENDA IS IN THE FOCUS OF INVESTORS
Analysts said risk appetite in equity markets weakened after the Fed’s continued cautious guidance and that intense macroeconomic data focused on investors this week.
In particular, analysts said personal consumption expenditure data, which the Fed watches closely as an indicator of inflation, could increase asset price volatility and that verbal guidance from Fed officials is expected to continue to have an impact on the direction of markets. .
According to money market pricing, the bank is certain to keep interest rates constant at its first meeting next year, with a 70 percent chance the Fed will begin cutting interest rates in March.
On the other hand, yesterday the Board of Governors of the International Monetary Fund (IMF) approved a 50 percent increase in the quotas of member countries and announced that the total quotas will rise to 960 billion dollars.
IMF President Kristalina Georgieva, whose views were included in the statement, said the increase in quotas will reduce the fund’s dependence on borrowed resources, restore the primary role of quotas in lending capacity and strengthen the IMF’s role at the center of the global financial safety net.
BRENT OIL PRICES ARE RISING
While asset prices saw a cautious trend following these developments, Brent crude, which gained 1.6 percent yesterday on negative news from the Red Sea, continued its uptrend for the fifth consecutive trading day and is trading at 78, $3, just above the previous close.
On the stock market side, US Steel shares rose more than 26 percent yesterday after news that Japan’s Nippon Steel will acquire the company for $14.9 billion.
While the Nasdaq index and the S&P 500 index rose by 0.61 percent and the S&P 500 by 0.45 percent yesterday on the New York Stock Exchange, the Dow Jones followed a horizontal course. US index futures started a mixed day.
A negative trend was observed yesterday in the European stock markets with the exception of the United Kingdom.
Yesterday, news of disruptions to international logistics due to rising regional risks in the Red Sea took center stage, while today all eyes on the data agenda turned to Eurozone inflation data.
Analysts said market expectations were for the euro zone’s consumer price index (CPI) to fall 0.5 percent month-on-month in November and rise 2.4 percent year-on-year.
BP announced yesterday that all tanker traffic through the Red Sea has been temporarily suspended due to security risks.
MSC, Hapag-Lloyd, CMA CGM and Maersk, one of the world’s largest logistics companies, also announced that some Houthi forces in Yemen have decided to temporarily halt Red Sea crossings, citing recent attacks on international shipping tankers.
Yesterday, Italy’s MIB 30 lost 0.44 percent, France’s CAC 40 lost 0.37 percent and Germany’s DAX 40 lost 0.60 percent, while the UK’s FTSE 100 rose 0.50 percent. Index futures contracts in Europe started the new day with a mixed course.
In Asia, as the Bank of Japan (BoJ) did not change its monetary policy, Japan’s Nikkei 225 index deviated positively from regional stock markets.
The BoJ remained the last central bank to introduce negative interest rate policy, keeping the key rate constant at minus 0.1 percent.
Despite rising normalization expectations in the markets, the BoJ’s decision did not signal that negative interest rate policy would end next year.
Following the decision, USD/JPY continued its uptrend for the third consecutive trading day and is currently at 143.5, up 0.4 percent.
On the other hand, as concerns about real estate companies in China continue to weigh on asset prices, the company’s share price fell to an all-time low after Country Garden, one of the country’s biggest companies, said it had set aside a contingency fund. .
In close proximity, Japan’s Nikkei 225 rose 1 percent, China’s Shanghai Composite fell 0.1 percent, Hong Kong’s Hang Seng fell 0.8 percent and South Korea’s Kospi shed 0.1 percent .