After the last monetary policy meeting of the News Center-Fed this year, it is observed that the selling wave in stocks continues in Asian markets. This morning in Japan, the Nikkei225 Index fell 0.41% and the Topix Index fell 0.23%. In China, the Shanghai Composite Index fell 0.46%, while the Shenzhen Composite Index was little changed. The Hong Kong Hang Seng Index lost 1.36%, leading the decline in Asia.
According to the data released today, the more-than-expected decline in retail sales in China in November also puts pressure on stocks. Also, there were reports yesterday that a key economic meeting in China was postponed due to the increase in Kovid cases in Beijing. The meeting between President Xi Jinping and senior officials will begin today and last for two days and will be closed to the press. Notable case spikes shortly after Beijing loosened its zero-case strategy are curbing risk appetite in mainland equities.
Following the November foreign trade figures, which point to a sharp decline in exports in South Korea, the Kospi Index is 1.23% and the Kosdaq Composite Index is 0.87% negative.
The MSCI Non-Japan Asia Index fell 1.00% today. We see that the optimism in the risk markets decreased somewhat after the Fed meeting, where the interest rate and inflation forecasts of the US policy makers were higher than the market expectations. As we mentioned before, the increase in the upper point estimates in interest rates was effective in yesterday's sale. However, we think that the impact on medium-term risk appetite will be limited after the short-term turmoil. Following the Fed, the interest rate decisions of the UK and European central banks will be followed today. On the side of the European Central Bank (ECB); Despite President Christine Lagarde's statement last month that there is probably no peak in inflation, the market's expectation that the rate hike will decline to 50bp is reasonable, considering the flattening/downturn seen in the latest data, as well as the signs of slowdown in the European economy. The ECB, which started its tightening cycle later than other global central banks, raised interest rates by 75 bps in the last two meetings, raising the main refinancing rate to 2.00%.
The bank has increased interest rates by a total of 200bps this year. After the meeting, Eurozone November CPI figures will be published tomorrow. On the Bank of England (BoE) side; The bank, which increased the policy rate by 75bps to 3.00% at its last meeting, stated that the interest rates had to increase in order to bring the inflation down to the target level, but the final level would be lower than the market expectation. There are no significant signs of a decline in inflation rates in the UK, and the country is at the beginning of a two-year recession, according to British policymakers.
A 50bps rate hike is expected from the bank today. In addition, December NY Empire State Manufacturing Index, Philadelphia Fed Manufacturing Index, November industrial production and retail sales data will be followed in the USA today. Home sales, agricultural PPI and central government budget balance data will be monitored in November. Housing sales across Turkey decreased by 25.3% annually to 102 thousand 660 in October. In the January-October period, it was 1 million 159 thousand 853 with an annual increase of 6.7%. Producer inflation in agricultural products was 4.59% monthly, 163.32% annually and 111.12% according to the twelve-month averages in October. On the Borsa Istanbul side; We expect the BIST100 Index to start the day with sales, after closing with a sharp decline due to the political news flow. The volatile course continues with sharp movements in both directions. We think that it is necessary to be cautious in short-term positioning.
What Happened In The Markets Yesterday?
In the middle of the week, there was a limited decrease in European stock indices. A negative outlook prevailed in US indices as well, with the Nasdaq Composite Index leading the way down 0.76%. The S&P 500 Index fell 0.61% and the Dow Jones Index fell 0.42%. The EUR/USD pair rose 0.5% to 1.068. The Dollar Index (DXY) fell to 103.7 from 104 points. US Treasury yields also fell. While the 10-year bond yield fell below 3.5% again, the 2-year interest rate closed the day at 4.23% for the first time since the beginning of October. An ounce of precious metals gold is priced above 1,800USD with horizontal sellers.
Brent oil, which entered an upward movement at the beginning of the week, increased by 2.6% yesterday to 83 USD per barrel. In the UK, monthly and annual CPI increased less than market expectations in November. The monthly CPI, which was measured as 2% in October, decreased to 0.4% and the annual CPI, which was 11.1%, to 10.7%. The Fed rate decision, which was at the center of global markets this week, was realized within expectations. At the last meeting of the year, the Fed decided to slow the pace of tightening by increasing interest rates by 50bps. Thus, the policy rate rose to the range of 4.25-4.50%.
This level was last seen in October 2007. Dotted charts are expected by Fed officials until the end of 2023.
