Global markets followed a mixed course as uncertainties regarding monetary policies around the world persisted.
While inflation risk continues to be influential on asset prices, signals that economic activity remains strong, especially in the US, continue to come in and complicate pricing.
US Federal Reserve (Fed) Chairman Jerome Powell, who continued his presentation on the Semiannual Monetary Policy Report at the House of Representatives’ Financial Services Committee yesterday, said that they have not made any decisions regarding the bank’s meeting on March 21-22 and that the data to be announced will be analyzed.
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Powell reiterated that they are ready to increase the pace of interest rate hikes if all the data show that faster tightening is necessary, and said, “I emphasize that there is no decision taken on this issue.”
When asked about their approach to the March meeting, Powell responded that the JOLTS Open Job Count, the employment report to be released on Friday and the Consumer Price Index (CPI) and Producer Price Index (PPI) data to be announced next week are important.
According to the data released yesterday in the US, the JOLTS Open Job Count came in above market expectations, although it decreased by 410 thousand in January compared to the previous month and fell to 10 million 824 thousand. Private sector employment in the country also increased by 242 thousand in February, above market expectations.
On the other hand, in the Fed’s “Beige Book” report published yesterday, it was reported that general economic activity increased “slightly” in early 2023. Pointing out that inflationary pressures remain widespread despite slowing price increases in many regions, the report noted that price increases are expected to continue to moderate throughout the year.
With these developments, the probability of a 50 basis point rate hike at this month’s meeting has risen to 79 percent in the pricing in the money markets, while a 25 basis point rate hike is considered certain at the meetings in May and June. While uncertainties regarding the meeting in July remain, expectations for at least 25 basis points more interest rate hikes in July are at 42 percent.
Analysts noted that non-farm employment data to be announced tomorrow is expected in the markets and stated that volatility in asset prices is expected to continue.
With these developments yesterday, the S&P 500 index rose 0.14 percent and the Nasdaq index rose 0.40 percent on the New York stock exchange, while the Dow Jones index fell 0.18 percent. Index futures contracts in the US started the new day with a decline.
Europe
While economic activity in Europe continued to give strong signals, according to data released yesterday, industrial production in Germany increased by 3.5 percent on a monthly basis, surpassing expectations.
While the Eurozone grew by 1.8 percent annually in the last quarter of last year, it did not change on a quarterly basis.
Analysts noted that inflation pressure in the region remained on the agenda, narrowing the policy space of the European Central Bank (ECB).
Yesterday, with these developments, the DAX 40 index in Germany gained 0.46 percent, the MIB 30 index in Italy 0.54 percent and the FTSE 100 index in the UK 0.13 percent, while the CAC 40 index in France fell 0.20 percent. Index futures contracts in Europe started the new day with a sales-heavy course.
Asia
While Asian stock markets followed a mixed course today, macroeconomic data announced in the region are effective in this course.
In Japan, Gross Domestic Product (GDP) increased by 0.1 percent on an annual basis in the 4th quarter of 2022, below expectations.
In China, inflation slowed down significantly, while producer prices continued to decline. This situation brought concerns about the country’s economic activity back to the agenda. While CPI in the country increased by 1 percent annually, PPI fell by 1.4 percent on an annual basis.
With these developments, the Nikkei 225 index in Japan and the Hang Seng index in Hong Kong gained 0.6 percent and 0.3 percent, respectively, while the Shanghai Composite index in China fell 0.1 percent and the Kospi index in South Korea fell 0.4 percent.
