Balance sheet optimism continues to be effective in global markets

In global markets, risk appetite remains strong as the data released in the US point to a strong stance in the country's economy, supporting "soft landing" scenarios and corporate profitability continues to exceed expectations across the world

9 mins read
Balance sheet optimism continues to be effective in global markets

While uncertainties regarding the monetary policy decisions to be taken by the US Federal Reserve (Fed) this year continue, the fact that corporate profitability exceeded expectations in balance sheets announced worldwide increases stock and sector-based volatility.

Disney, which published its balance sheet after the markets closed yesterday, reported a profit above expectations and announced that it will buy 1.5 billion dollars worth of shares from video game developer Epic Games. Shares of the media giant rose 11.5 percent.

Despite announcing fourth-quarter results above expectations, the shares of PayPal, the online payment system that predicts a weak outlook for this year, fell by up to 11 percent.

UK-based chip design company Arm announced profits and revenues above expectations. The shares of the company, which said that artificial intelligence increased sales and expected strong results for the next period, increased by about 48 percent.

On the other hand, Richmond Fed President Thomas Barkin yesterday joined the list of Fed officials who think that the Fed should not be in a hurry to cut interest rates. Barkin stated that the Fed’s decision to cut interest rates may take some time, adding that the upcoming inflation data is likely to be positive.

On the macroeconomic data side, the number of first-time jobless claims in the US fell to 218 thousand in the week ending February 3, below expectations, indicating that the tight stance in the labor market continued.

In addition, US Treasury Secretary Janet Yellen said yesterday that she expects there to be “stress and losses” in the banking sector due to weakness in the commercial real estate market, but that she believes this will not become a risk to the banking system.

Along with these developments, the US Treasury Department sold 25 billion dollars worth of 30-year bonds yesterday. The country’s 10-year bond interest rate also increased by 5 basis points to 4.16 percent yesterday, while following a horizontal course today.

While the dollar index is at 104.2 with a horizontal course, the price of gold ounce is just above its previous close at $ 2,33.

While developments in the Middle East were closely monitored, the news flow that Israeli Prime Minister Benjamin Netanyahu would reject a possible ceasefire in the Israel-Hamas war caused the risks in the region to increase again and supported oil prices upwards.

The price per barrel of Brent oil is rising

Yesterday, the barrel price of Brent oil, which carried the upward trend to the fourth consecutive trading day, increased by 2.8 percent and completed the day at $ 81.5, while it is currently trading at $ 81.1, 0.5 percent below its previous close.

However, in the first hearing of the case on whether former US President Donald Trump can participate in the elections, most of the US Supreme Court justices who heard the parties found the arguments of the state of Colorado, which had ruled that Trump could not appear on the ballot on the grounds that he had committed the crime of “insurrection”, insufficient.

In the news reflected in the American media, the first hearing resulted in a result in Trump’s favor and the case is expected to result in a decision that Trump cannot be prevented from participating in the elections.

On the cryptocurrency markets side, the price of Bitcoin rose above $45,000, carrying its upward trend to the fourth consecutive trading day, with the increase in the risk appetite of global markets and continued interest in spot Bitcoin exchange-traded funds (ETFs).

Yesterday, the Nasdaq index on the New York stock exchange gained 0.24 percent to its highest level in nearly two years, while the S&P 500 index increased by 0.06 percent and the Dow Jones index increased by 0.13 percent to reach an all-time high closing. Index futures contracts in the US started the new day with a mixed course.

Eyes on final inflation data in Germany

While European stock markets were positive yesterday, except for the UK, today all eyes turned to the final inflation data in Germany.

Analysts reminded that according to preliminary data in Germany in January, the Consumer Price Index (CPI) is expected to increase by 0.2 percent monthly and 2.9 percent annually.

On the other hand, Bank of England (BoE) Monetary Policy Committee Member Catherine Mann warned that there is still a risk of a persistent acceleration in inflation in the country.

Stating that the bank voted to raise the policy rate at the last committee meeting in order to combat the harmful costs of inflation, Mann said, “Inflation is the most harmful of taxes, affecting all households and most severely low-income earners.”

Looking at the companies that attracted attention in European stock markets yesterday, in addition to the Danish shipping company Maersk’s decision to suspend share buybacks, the company’s shares fell 15 percent after the company announced that disruptions in shipping from the Red Sea could affect revenues this year.

Yesterday, the FTSE 100 index in the UK decreased by 0.44 percent, while the DAX 40 index in Germany gained 0.25 percent, the MIB 30 index in Italy gained 0.28 percent and the CAC 40 index in France gained 0.71 percent. Index futures contracts in Europe started the new day with a mixed course.

Mixed trend in Asian equity markets

Chinese and South Korean stock markets were closed due to a holiday.

The Japanese yen’s losses against the dollar continue after Bank of Japan (BoJ) Deputy Governor Shinichi Uchida’s statements that the bank will not rush to change its loose monetary policy settings.

Following the announcement, the dollar/yen pair increased by 0.8 percent to 149.3 yesterday, reaching its highest daily close since November 27. The pair is currently at 149.4, just above its previous close.

Near the close, the Nikkei 225 index in Japan increased by 0.3 percent, while the Hang Seng index in Hong Kong fell 0.8 percent. Stock markets in Hong Kong traded for half a day due to the New Year holiday.

Record closing in Borsa Istanbul

In Borsa Istanbul, which followed a buying-weighted course yesterday in Turkey, the BIST 100 index broke a closing record by completing the day at 8,949.79 points with a 1.21 percent gain in value. The index reached its highest level of 8,990.37 points.

Dollar/TL is traded at 30.6800 at the opening of the interbank market today after completing the day at 30.5938 following a horizontal course yesterday.

On the other hand, Fatih Karahan, the new Governor of the Central Bank of the Republic of Turkey (CBRT), held his first “Inflation Report” meeting together with CBRT Deputy Governors Cevdet Akçay and Hatice Karahan. Karahan stated that the reflection of monetary tightness on pricing behavior was stronger than they had anticipated.

Inflation forecast for end-2024 is 36 percent
Stating that the year-end inflation forecasts for 2024, 2025 and 2026 were maintained as in the previous report, Karahan noted that the year-end forecast for 2024 was 36 percent and the year-end forecast for 2025 was 14 percent.

In addition, the Capital Markets Board (CMB) issued regulations on the application of inflation accounting. With the regulation, an additional period of 15 days was given for companies to go public with 9-month balance sheets. The Board also approved the public offering of Limak East Anatolia Cement Industry and Trade Co.


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