Global markets focused on PMI data – Spokesperson


While the focus of investors was the verbal guidance of central bank officials, the intense macroeconomic calendar and the ongoing debt limit crisis in the USA, the search for direction in global markets continued with mixed signals received last week.

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Global markets focused on PMI data

While the global stock markets followed a positive course in the week with the intense data agenda, the leading Purchasing Managers Index (PMI) data to be announced around the world for the next week and the Federal Open Market Committee (FOMC) meeting minutes placed the focus of the investors.

While the focus of investors was the verbal guidance of central bank officials, the intense macroeconomic calendar and the ongoing debt limit crisis in the USA, the search for direction in global markets continued with mixed signals received last week.

While the developments regarding the US debt limit crisis were followed throughout the week, the debt limit negotiators appointed by the Speaker of the US House of Representatives Kevin McCarthy left the talks they started with the White House officials yesterday, putting the debt limit negotiations in a deadlock again.

THE WORLD’S MOST DEBT COUNTRY

Republican representative Garret Graves said White House officials paused on the grounds that the negotiations were not productive, arguing that it was “totally unreasonable”.

In a letter sent to McCarthy to share updated information on the debt limit, US Treasury Secretary Janet Yellen warned that the country could face a cash shortage if the debt limit is not increased or suspended by June 1.

While the debt limit, or debt ceiling, means “the upper limit of the amount of money the US government can borrow to pay off its debts,” the United States, which is the most indebted country in the world, has reached a debt limit of $31.4 trillion, which can lead to default.

On the other hand, US Federal Reserve (Fed) Chairman Jerome Powell stated that the developments in the banking sector contributed to the tightening of credit conditions and that it may not be necessary for interest rates to rise as much as they normally should.

EXPLANATIONS FROM THE DOLLAR’S BOSS

Recalling that they used liquidity tools for banks when the stress in the banking sector arose at the beginning of March, Powell explained that the liquidity in question supports the stability of the financial system without restricting the use of the bank’s monetary policy tools to ensure price stability.

Last week, Fed officials continued their verbal guidance, while New York Fed President John Williams noted that inflation was unacceptably high. Chicago Fed President Austan Goolsbee stated that he did not make any decision for the June meeting, adding that it is too early to discuss rate cuts.

After these developments, while the expectations that the Fed will not change the policy rate next month in the pricing in the money markets remained strong, the expectations that the bank would increase the interest rate by 25 basis points in June became 17.4 percent.

If the debt limit crisis in the USA is overcome, the prediction that the government will increase bond sales to meet its cash needs increased the selling pressure in the bond markets, while the 10-year bond yield of the USA finished the week with an increase of approximately 21 basis points at 3.6830.

While the price of gold tested the lowest level of the last 1.5 months at $ 1,952 during the week, it closed the week at $ 1,978, 1.6 percent below its previous closing.

The barrel price of Brent oil, which has been in a downward trend for four weeks in a row, started to rise this week and finished at $ 75.7, 2.3 percent above the previous closing.

FOCUS ON GROWTH DATA IN THE USA

While the stock markets in the USA followed a positive course in the week with the intense data agenda and the verbal guidance of the Fed members, the growth data to be announced in the country next week and the FOMC meeting minutes placed the focus of the investors.

Analysts stated that the developments regarding the ongoing debt limit crisis in the USA will continue to remain in the focus of investors, adding that macroeconomic data, in which signals about economic activity will be sought, will also play an important role in shaping the Fed’s expectations for the next period.

On the other hand, in a report on CNN yesterday, it was reported that US Treasury Secretary Janet Yellen told the top managers (CEO) of banks that more bank mergers may be necessary.

In addition, the United States and Taiwan have agreed on the first phase of their trade initiatives, covering customs and border procedures, regulatory practices and small businesses.

Macroeconomic data released in the US during the week continued to give mixed signals. While retail sales in the country fell 0.4 percent month-on-month in April, below market expectations, industrial production rose 0.5 percent month on month and housing starts 2.2 percent over the same period, exceeding forecasts.

With these developments, the S&P 500 rose by 1.65 percent, the Dow Jones index by 0.38 percent and the Nasdaq index by 3.04 percent in the New York stock market last week.

In the data calendar of the week that started with May 22, manufacturing sector, services, composite PMI and new home sales on Tuesday, FOMC meeting minutes on Wednesday, 1st quarter growth on Thursday, personal consumption expenditures, foreign trade balance, durable goods orders and sales on Friday. Michigan Consumer Confidence Index data will follow.

EYES LOOKED TO PMI DATA IN EUROPE

In the European stock markets, a positive trend was observed in the week in which inflation was announced in the region, while the leading PMI to be announced throughout the region next week and the inflation data in the UK placed the focus of investors.

Analysts reported that the CPI in the UK is expected to increase by 0.8 percent monthly and 8.3 percent annually in April.

According to the data released last week, the Consumer Price Index (CPI) in the Euro Zone increased by 7 percent, in line with the expectations.

While the members of the European Central Bank (ECB) continued their “hawk” guidance, ECB member Robert Holzmann stated that interest rates should exceed 4 percent. In terms of pricing in money markets, it is considered certain that the ECB will increase interest rates by at least 50 basis points in the next period.

On the other hand, according to the data released last week, while industrial production in the Euro Zone fell by 4.1 percent month-on-month in March, below expectations, the region’s economy grew by 1.3 percent in the first quarter, according to leading data.

While the Euro Area had a foreign trade surplus of 25.6 billion Euros in March, the ZEW Economic Confidence Index for May was below the projections with a minus 9.4.

Investor confidence in Germany, too, came in at minus 10.7 in May, below expectations, as concerns about a recession increased after uncertainties over inflation and monetary policy. Producer Price Index (PPI) exceeded forecasts with an increase of 0.3 percent month on month and 4.1 percent year-on-year in April, according to data released yesterday.

On the other hand, the euro/dollar parity, which tested the lowest level of the last 1.5 months with 1.0760 during the week, closed the week at 1.0810, 0.4 percent below its previous close.

With these developments, the CAC 40 index increased by 1.04 percent in France and the MIB 30 index increased by 0.63 percent in Italy, while the FTSE 100 index in the UK completed the week with a flat course, just above its previous closing.

While the DAX index in Germany renewed its record by testing 16,331.94 points, it completed the week at 16,275.38 points with an increase of 2.3 percent and realized the strongest weekly close.

Next week’s Consumer Confidence Index in the Eurozone on Monday, leading manufacturing sector, services and composite PMI in the region on Tuesday, current account balance in the Eurozone, inflation in the UK on Wednesday, first quarter growth in Germany on Thursday and Friday. Retail sales data in the UK will be followed.

CHINA’S INTEREST DECISION IS IN THE FOCUS OF INVESTORS

While a positive course stood out in Asian stock markets last week, excluding Hong Kong, the stronger-than-expected growth of the Japanese economy in the first quarter supported the risk appetite in the stock markets. The interest rate decision to be announced by the People’s Bank of China (PBoC) next week has been in the focus of investors.

Recalling that the market expectations that the PBoC can lower interest rates to support the economy are getting stronger day by day, analysts noted that the bank’s lowest loan interest rate is priced in the money markets as well.

On the other hand, according to the data released last week, the Japanese economy grew by 1.6 percent in the first quarter of the year, while industrial production increased by 1.1 percent monthly in March, exceeding expectations.

In the country, core inflation increased by 3.4 percent on an annual basis, exceeding the targets of the Bank of Japan (BoJ), while exports increased by 2.6 percent and imports fell by 2.3 percent, below the forecasts.

While concerns about economic activity continue in China, industrial production increased by 5.6 percent and retail sales by 18.4 percent in April, according to the data announced in the country, but failed to meet the projections.

With these developments, the Shanghai composite index increased by 0.34 percent in China and the Kospi index in South Korea increased by 1.62 percent on a weekly basis, while the Hang Seng index in Hong Kong decreased by 0.90 percent.

Nikkei 225 index in Japan also renewed its record by testing 30,924.57 points, and completed the week at 30,808.35 points with an increase of 4.83 percent, realizing the strongest weekly close.

In the data calendar of the week starting with May 22, interest rate decision in China on Monday, manufacturing sector and services PMI in Japan on Tuesday, Tokyo CPI data in Japan on Friday will be followed.

DOMESTIC EYES ON CBRT INTEREST DECISION

While the BIST 100 index closed at 4,501.73 points with a 6.13 percent depreciation last week, eyes were turned to the policy rate decision of the Central Bank of the Republic of Turkey (CBRT) for the next week.

Last week, Borsa Istanbul created the “Venture Capital Market” to meet the financing needs of companies that are not yet ready for public offering, but want to do so in the future.

The Capital Markets Board (CMB) also approved the free capital increase of Sasa Polyester Sanayi AŞ and Çemtaş Çelik Makina Sanayi ve Ticaret AŞ.

According to the CBRT Market Participants Survey announced last week, the year-end CPI increase was expected to be 37.17 percent, while the CBRT Financial Stability Report stated that the et quality indicators of the banking sector continued to improve.

Dollar/TL closed the week at 19.8123, 1.2 percent above the previous weekly closing.

Analysts said that in the BIST 100 index, technically, 4.400 and 4.300 levels can stand out as support, and 4.700 and 4.800 points as resistance.

In the next week, foreign PPI, Agricultural Input Price Index and Consumer Confidence Index on Monday, Financial Services Confidence Index on Tuesday, capacity utilization rate on Wednesday, CBRT’s interest rate decision on Thursday and tourism statistics on Friday will be followed.

On the other hand, economists participating in AA Finans’ survey expect the CBRT to keep the policy rate unchanged at its meeting next week. (AA)



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